Face2News/Chandigarh
Responding to Union Finance Minister Nirmala Sitharaman’s assertion in Chicago on Sunday that India has covered the last mile of its fiscal consolidation path, KBS Sidhu, former IAS officer of the 1984 batch of the Punjab cadre, has published a detailed appraisal of the Union accounts for 2025-26, welcoming the achievement while pointing to what he describes as underlying concerns, if not infirmities and fault lines, that will need to be addressed on the path towards the close of 2026-27.
Addressing the Indian diaspora at the Consulate General of India’s office in Chicago, the Finance Minister told her audience that the trajectory the Government had set itself had been fulfilled, and set India’s debt-to-GDP target against the position of several advanced economies.
The provisional accounts released by the Controller General of Accounts on 1 June 2026 bear her out on the arithmetic, placing the fiscal deficit at ₹15,19,169 crore, or 4.4 per cent of GDP.
KBS Sidhu describes the result as a creditable one, and says so without qualification. He notes in particular that the ratio was held against a nominal GDP of ₹346.36 lakh crore, some ₹11 lakh crore below the figure the Budget had assumed, and that the post-Covid undertaking to bring the deficit below 4.5 per cent by 2025-26 has been redeemed.
His reservations concern the composition of the year rather than its total. Reading the accounts against the Budget Estimates of 1 February 2025 rather than against the Revised Estimates presented a fortnight before the year closed, he points out that net tax revenue fell short by ₹2,14,145 crore, a little over 7.5 per cent, while total expenditure came in ₹1,60,194 crore below the original provision. Capital expenditure, which the Government has itself made the centrepiece of its economic strategy, was ₹51,971 crore short of its allocation and rose by only about 1.6 per cent in nominal terms. Revenue expenditure fell short by a further ₹1,08,223 crore.
“Expenditure not incurred is not, by that fact alone, expenditure efficiently saved.”
The phrase is his own, and he draws on his years in a State Finance Department to point to the surrender statement, the schedule of provisions voted, allotted and ultimately returned unused, which he says frequently tells the truer story of a financial year than the account of what was spent.He also flags the character of the receipts that closed the gap. Non-tax revenue exceeded its Budget Estimate by ₹95,961 crore, or 16.5 per cent. Such receipts are entirely legitimate, KBS Sidhu says, but they are not the economic equivalent of sustained tax buoyancy, and unlike taxes they are not shareable with the States. Devolution to the States in 2025-26 stood at ₹13,92,971 crore, and he observes that the divisible pool grows with tax collections and not with a large dividend from the central bank.
The heaviest single entry, he notes, remains interest, at ₹12,42,575 crore, absorbing 37.6 paise of every rupee of the Centre’s revenue receipts. Set against that, he points to the primary deficit of ₹2,76,594 crore, about 0.8 per cent of GDP, as evidence that the underlying position before the servicing of legacy debt has strengthened considerably.
KBS Sidhu is careful to say that none of this amounts to an alarm. Writing on public finance, he observes, has a weakness for the vocabulary of crisis, and these accounts do not warrant it. His argument is that the three features are treatable now by unremarkable means, and that the value of examining them early is precisely that the remedies available early are the undemanding ones.The full article, titled “Congratulations, Madam Finance Minister: 4.4 Per Cent It Is”, is available on The KBS Chronicle at kbssidhu.substack.com.
Chandigarh
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