Unspent funds of up to ₹75,000 crore may help Centre meet FY26 fiscal deficit target

New Delhi: The Centre is likely to save ₹70,000-₹75,000 crore this fiscal year with several key ministries and flagship welfare schemes failing to utilise funds allocated to them in the Union budget.

The savings of nearly 1.5% of the total expenditure budget of ₹50.65 lakh crore will give the government enough headroom to absorb the extra burden from additional subsidy outgo and marginal shortfall in tax receipts, helping it to maintain the fiscal deficit target of ₹4.4% of GDP, officials said.

Majority of this saving is expected to come from the ministries of Jal Shakti, housing and urban affairs and rural development, with slow fund utilisation under Jal Jeevan Mission, Pradhan Mantri Awas Yojana (PMAY), and Pradhan Mantri Gram Sadak Yojana (PMGSY), among others, with 11 ministries and departments spending less than 25% of the budget in the first three quarters of FY26.

"There will be savings of at least ₹70,000-₹75,000 crore this fiscal year as many ministries will not be able to exhaust their funds due to various reasons," a senior government official told ET.

For instance, the Ministry of Jal Shakti has spent less than 10% of its budget allocation of ₹99,502.85 crore, while the Ministry of Housing and Urban Affairs has spent just 12% of its ₹59,200 crore revenue expenditure allocation for FY26 as of December. The outlay covers PMAY (Urban), the Smart Cities Mission, and Swachh Bharat.

In FY25 also, the budget for centrally-sponsored schemes and other transfers were marked lower in the revised estimates (RE) by ₹90,622 lakh crore, mainly due to poor utilisation under Jal Jeevan Mission and PMAY. Among the other ministries lagging behind is the Ministry of Labour and Employment, which spent less than a third of its budgetary allocation of ₹32,646.19 crore, while the Ministry of Skill Development and Entrepreneurship exhausted about a fifth of its total budgetary allocation of ₹6,100 crore.

The official cited above expects savings of at least ₹13,000 to 14,000 crore under the Pradhan Mantri Gram Sadak Yojna, more than 10,000 crore for PM Awas Yojna urban and rural, and between ₹5,000 to 7000 crore for PM Surya Ghar Muft Bijli Yojana.

Officials said the savings are based on projected utilisation by the ministries in the last quarter of the fiscal year and that the actual savings may go up further.

According to ICRA Research, non-interest revenue expenditure would need to grow by nearly 25 to 30% year-on-year between December and March to meet the FY26 budget estimates-an outcome that appears increasingly unlikely.In the last five years, actual spending has consistently undershot budgeted levels.