Monthly review of accounts of Government of India upto September 2026 (FY 2026-27)

1. At a Glance

• The Monthly Review of Accounts is the Ministry of Finance's consolidated report, released through PIB, of the Union Government's cumulative receipts and spending, each shown as a percentage of the Budget Estimates (BE) [1].
• September closes H1 (April–September) of FY 2026-27. Total Receipts were 50.3% of BE and Total Expenditure 47.7% of BE, so the year is running roughly on track [1].
• This is the main mid-year check on whether the BE 2026-27 fiscal deficit target of 4.3% of GDP can be met [1][4].
• Useful for UPSC on fiscal terms (net tax, Non-Debt Capital Receipts, revenue vs capital account), fiscal federalism (devolution) and the quality of spending (interest and subsidy burden).

2. Why in the News

• The September 2026 (H1) accounts were released showing ₹18,35,422 crore of receipts and ₹25,49,835 crore of expenditure [1].
• Tax devolution to States reached ₹6,99,409 crore, ₹67,658 crore more than in the same period last year [1].
• This is the first H1 of the 16th Finance Commission award period (2026-31). The Government kept the States' vertical share at 41% [6].

3. Background & Evolution

• These accounts are released every month as a series. Earlier ones include the September 2025 review for FY 2025-26 [8] and the August 2026 review for FY 2026-27 [2].
• 1 Feb 2026: Union Budget 2026-27 presented. Fiscal deficit target 4.3% of GDP, down from 4.4% (RE 2025-26) [4]. In rupees, the target is ₹16,95,768 crore [5].
• 1 Feb 2026: The 16th FC report (2026-27 to 2030-31) was tabled in Parliament, and the Government accepted the 41% vertical share [6][7].
• 30 Sep 2026: The August 2026 accounts showed expenditure of ₹20,77,958 crore (38.9% of BE) [2].
• Oct 2026: The September 2026 accounts were released (H1 position) [1].
• Not checked against a whitelisted source: the accounts are compiled by the Controller General of Accounts (CGA), Department of Expenditure. Fiscal targets are set under the FRBM Act, 2003.

4. Core Static Facts

Item	Value (up to Sep 2026)	Source
Total Receipts	₹18,35,422 cr (50.3% of BE)	[1]
Components of Total Receipts	Tax Revenue (Net to Centre) + Non-Tax Revenue + Non-Debt Capital Receipts (no borrowings)	[1]
Total Expenditure	₹25,49,835 cr (47.7% of BE)	[1]
Interest Payments (in revenue expenditure)	₹6,46,010 cr	[1]
Major Subsidies (in revenue expenditure)	₹2,22,905 cr	[1]
Devolution to States	₹6,99,409 cr (+₹67,658 cr YoY)	[1]
Expenditure up to Aug 2026	₹20,77,958 cr (38.9% of BE): Revenue ₹15,68,009 cr; Capital ₹5,09,949 cr	[2]
Devolution up to Aug 2026	₹5,90,391 cr	[2]
BE 2026-27 Total Expenditure	₹53.47 lakh cr (+7.7%)	[3]
BE 2026-27 Fiscal Deficit	4.3% of GDP; ₹16,95,768 cr	[4][5]
BE 2026-27 Revenue Deficit	1.5% of GDP	[3]
BE 2026-27 Capital Expenditure	₹12.22 lakh cr (~3.1% of GDP)	[4]
Effective Capex (incl. ₹4.93 lakh cr grants for capital assets)	~₹17.15 lakh cr (~4.4% of GDP)	[4]
Debt-to-GDP (BE 2026-27)	55.6% (vs 56.1% RE 2025-26)	[4]
Vertical devolution (16th FC, 2026-31)	41% of divisible pool (same as 15th FC)	[6]

Figures I derived from the above (not officially published):

• Expenditure minus receipts in H1 = ₹7,14,413 cr. Total Receipts leave out borrowing, so this gap is roughly the H1 fiscal deficit, about 42% of the BE figure of ₹16,95,768 cr [1][5].
• Interest Payments are about 25.3% of total expenditure and about 35.2% of total receipts. Major Subsidies are about 8.7% of total expenditure [1].
• September alone added about ₹4,71,877 cr of expenditure and about ₹1,09,018 cr of devolution [1][2].
• Same period last year, devolution was about ₹6,31,751 cr [1].
• Cross-check: ₹25,49,835 cr ÷ 0.477 ≈ ₹53.46 lakh cr, which matches the PRS BE figure of ₹53.47 lakh cr [1][3].

Key terms [1]:

• Tax Revenue (Net to Centre): gross tax minus the States' share.
• Non-Tax Revenue: income on the revenue account that is not tax.
• Non-Debt Capital Receipts: capital inflows that create no liability.
• Revenue Account: running costs (interest, subsidies).
• Capital Account: spending on asset creation.

5. Multi-Dimensional Analysis

Economic / Fiscal

• Receipts (50.3%) are ahead of expenditure (47.7%) at half-year, which leaves some room in H2 for the 4.3% target [1][4].
• About 42% of the full-year deficit has been used by H1 (my derivation). That suggests consolidation is on course, but the H2 spending pattern will decide it [1][5].
• Spending had reached only 38.9% of BE by August and 47.7% by September, so September was a heavy spending month [1][2].

Quality of Expenditure

• About a quarter of all spending goes on interest (₹6,46,010 cr). This is committed, so it squeezes room for development spending [1].
• Interest and Major Subsidies together are about ₹8.69 lakh cr, roughly 34% of H1 expenditure (my derivation) [1].
• The Budget's push on capex is ₹12.22 lakh cr, or ₹17.15 lakh cr counting grants for capital assets. How fast capital account spending moves is the key test in H2 [4][2].

Federalism / Governance

• Devolution rose by ₹67,658 cr YoY, which supports States' budgets [1].
• The 41% share continues, even though 14 of the 15 States the 16th FC visited asked for 50% [6][9].
• The divisible pool excludes cesses and surcharges and the cost of collection. States' complaints that rising cesses shrink what they get therefore remain [6].
• The 16th FC changed the horizontal criteria: the Population (2011) weight is 17.5% and income distance fell to 42.5% from 45% [7].

Transparency / Accountability

• Monthly public release of the accounts allows course-correction mid-year and Parliamentary scrutiny before the Revised Estimates (RE) [1][2].

6. Recent Developments (last 12–18 months)

• Oct 2025: September 2025 accounts (FY 2025-26) released, which is the YoY baseline [8].
• 1 Feb 2026: Budget 2026-27 set the fiscal deficit at 4.3%, capex at ₹12.22 lakh cr and debt-to-GDP at 55.6% [4].
• 1 Feb 2026: 16th FC report tabled. 41% retained. ₹2,04,401 cr disaster corpus (SDRF/SDMF). About ₹1.4 lakh cr of FC grants to States in FY 2026-27 [6][7].
• 30 Sep 2026: August 2026 accounts released, with expenditure at 38.9% of BE [2].
• Oct 2026: September 2026 accounts released, with receipts at 50.3% and expenditure at 47.7% of BE [1].

7. Prelims Hooks

• Up to Sep 2026, Total Receipts were ₹18,35,422 cr = 50.3% of BE 2026-27 [1].
• Up to Sep 2026, Total Expenditure was ₹25,49,835 cr = 47.7% of BE 2026-27 [1].
• "Total Receipts" in monthly accounts = Net Tax + Non-Tax Revenue + Non-Debt Capital Receipts. Borrowings are excluded [1].
• Tax Revenue is reported net of the States' share [1].
• Devolution up to Sep 2026 was ₹6,99,409 cr, up ₹67,658 cr YoY [1].
• Interest Payments up to Sep 2026 were ₹6,46,010 cr, the largest committed item in revenue expenditure [1].
• Major Subsidies up to Sep 2026 were ₹2,22,905 cr [1].
• BE 2026-27 fiscal deficit is 4.3% of GDP (RE 2025-26: 4.4%) [4].
• BE 2026-27 revenue deficit is 1.5% of GDP [3].
• BE 2026-27 capex is ₹12.22 lakh cr (~3.1% of GDP). Effective capex is ~₹17.15 lakh cr (~4.4%) [4].
• BE 2026-27 Debt-to-GDP is 55.6% [4].
• The 16th FC (2026-31) kept the vertical share at 41%, the same as the 15th FC (2020-26) [6].
• The 16th FC set the Population (2011) weight at 17.5% and income distance at 42.5% [7].
• Cesses and surcharges are outside the divisible pool [6].

8. Why the Half-Year Number Looks Better Than It Is

• One large payment comes early in the year and will not come again
• Under Section 47 of the RBI Act, 1934, the RBI pays its surplus profit to the Centre after setting money aside for risks [16].
• This payment arrives in the first quarter. In June 2026 the RBI Governor said the Government's cash balances had swelled after the surplus transfer [15].

• So H1 receipts (April–September) carry a one-time boost that H2 (October–March) will not get. Receipts at 50.3% of BE do not mean the second half will match the first [1].

• More spending is still to come in the second half than in the first

• The H1 spend was about ₹25.50 lakh cr out of a BE of about ₹53.47 lakh cr. That leaves roughly ₹27.97 lakh cr for H2, more than was spent in H1 (my derivation) [1][3].

• Spending jumped from 38.9% to 47.7% of BE in a single month. That shows how fast the gap can close once spending picks up [1][2].

• How to read the 42% figure

• Using 42% of the full-year deficit by H1 looks comfortable. But it leaves about ₹9.81 lakh cr of deficit for H2, which is bigger than the H1 deficit of ₹7.14 lakh cr (my derivation) [1][5].
• The real test comes in the Revised Estimates (the mid-year updated budget figures). Check whether receipts hold up there, not just whether H1 looks good.

9. What the Monthly Accounts Leave Out

• Some borrowing never shows up in the deficit
• The CAG (Comptroller and Auditor General, who audits government accounts) found that the Centre had borrowed through bodies like IRFC and PFC. This money paid for Government work but stayed outside the fiscal indicators [10].
• The CAG said such off-budget borrowing (loans taken by other bodies on the Government's behalf) is outside the control of the Budget and of Parliament [10].
• The Finance Ministry replied that the Budget repays this money, and that the 2018 FRBM amendments widened the definition of debt. The CAG still held that the fiscal deficit was understated [10][12].

• The monthly accounts count only what passes through the Government's own books. So they cannot tell you whether this practice is still going on.

• Cess money collected but not put to its stated use

• A cess is a tax collected for a named purpose, such as education or cleanliness.
• For 2016-17, the CAG found about ₹31,156 crore of cess money that was never moved into the funds meant for those purposes [11].
• For 2017-18, the CAG found that money from cesses such as the Swachh Bharat Cess and the Primary Education Cess was not fully transferred. This made both the revenue deficit and the fiscal deficit look smaller than they really were [12].
• So a neat monthly deficit figure can still hide spending that has been pushed into later years.

10. Why Interest Leaves So Little Room

• Interest is the first claim on every rupee the Centre earns
• In BE 2026-27, interest payments take about 40% of revenue receipts (tax and non-tax income, not counting loans) [3].
• About 65.3% of revenue receipts are already committed to salaries, pensions and interest. That leaves about a third for everything else [3].

• In H1, interest already took about 35% of total receipts (my derivation) [1].

• The chain: old debt → interest → new borrowing

• When interest eats revenue, the Centre has to borrow to fund capex (spending on roads, railways and other assets).

• New borrowing adds to debt, and next year's interest bill grows. This is why the high capex target and the deficit target pull against each other [4].

• The Government's answer is a debt target, not just a deficit target

• The Centre now aims to bring its debt down to 50% ± 1% of GDP by March 2031, from 55.6% in 2026-27 [3][4].
• The interest burden falls only if debt falls faster than the economy grows. One good half-year does not prove that.

11. Why the States Say 41% Is Really Less

• The 41% applies to a pool that keeps shrinking
• Under Article 270, cesses and surcharges are left out of the divisible pool (the part of central taxes shared with States) [14].
• Cesses and surcharges have doubled since 2011, to about 18% of the Centre's gross tax revenue [13].

• So in 2020-21 the States actually got only about 29% of the Centre's gross tax revenue, not 41% [14].

• The rise in devolution in this note does not settle the dispute

• The ₹67,658 cr increase in devolution comes from higher tax collection, not from a bigger share [1][6].

• When the Centre raises money through a cess instead of income tax or GST, the States get nothing from it.

• The Centre's side, and why it is weaker than it looks

• The Centre says a cess is collected for a fixed national purpose, so it should not be shared.
• But the CAG found that cess money was often never moved into those purpose-specific funds. That undercuts the claim that the money is earmarked (kept aside for a named use) [11][12].
• What the Centre gets right: the Constitution does allow cesses to be kept out of the pool [14]. The real question is how much of the Centre's revenue should come from them.

12. What Should Change, and Who Should Do It

• The Ministry of Finance should publish off-budget borrowing alongside the monthly accounts
• The CAG asked for full disclosure of borrowing done outside the Budget [10].

• If the extra-budgetary figure appeared next to each month's deficit, Parliament would see the whole deficit, not just part of it.

• The Government should move cess money into its named funds every year

• The CAG recommended that earmarked cess money go into designated Public Account funds and not sit in the Consolidated Fund [11].

• This would show whether a cess is really being spent on its stated purpose. That would also answer the States' charge that cesses are a way to avoid sharing revenue.

• The Finance Commission and Parliament should track the cess share as its own number

• Cesses and surcharges rose to about 18% of gross central tax revenue [13]. The gap between "41% on paper" and "about 29% in reality" depends on this one figure [14].
• Reporting it every year would let States and the Finance Commission see if the gap is widening.

13. Anchors for Answers

• Data: Interest takes about 40% of the Centre's revenue receipts in BE 2026-27, and 65.3% of revenue receipts is committed to salaries, pensions and interest [3]
• Data: Cesses and surcharges are about 18% of the Centre's gross tax revenue, double the 2011 level [13]. The States' real share of gross tax was about 29% in 2020-21 [14]
• Data: Debt is 55.6% of GDP in 2026-27, with a target of 50% ± 1% by March 2031 [3][4]
• Report/Committee: CAG Report No. 20 of 2018 (FRBM compliance 2016-17), on off-budget borrowing via IRFC and PFC and ₹31,156 cr of cess not transferred [10][11]. CAG Report No. 6 of 2021, on short transfer of cess understating the deficits [12]. Bimal Jalan Committee (2019), on the RBI surplus transfer framework [16]
• Law/Case: FRBM Act, 2003 (amended 2018). Article 270 (keeps cesses and surcharges out of the divisible pool) [14]. Section 47 of the RBI Act, 1934 (RBI surplus to Government) [16]

14. Mains Relevance

• GS-III: Indian Economy, covering mobilisation of resources, Government Budgeting, fiscal policy and fiscal consolidation.
• GS-II: Fiscal federalism, covering Finance Commission, Centre–State financial relations, and transfer of finances to local levels.
• Question stems: 1. Mid-year accounts show receipts outpacing expenditure. Discuss the role of in-year fiscal monitoring in achieving fiscal consolidation targets. (GS-III, 15 marks) 2. Interest payments take a growing share of Union revenue expenditure. Examine the implications for fiscal space and developmental spending. (GS-III, 10 marks) 3. Despite a 41% vertical share, States' complaints about shrinking fiscal space persist. Analyse the role of cesses and surcharges in this context. (GS-II, 15 marks)

15. Related Topics to Study Next

• FRBM Act, 2003 and the debt-to-GDP glide path: the legal anchor for the fiscal deficit target.
• 16th Finance Commission (2026-31): devolution criteria, grants, and the disaster corpus.
• Cesses and surcharges and the divisible pool: the main dispute in Centre–State fiscal relations.
• Types of deficit (fiscal, revenue, effective revenue, primary): needed to read the monthly numbers.
• Effective capital expenditure and grants for creating capital assets: how the quality of spending is measured.
• Budget cycle (BE → RE → Actuals) and CAG audit: where the monthly accounts sit in the accountability chain.
• Union Budget 2026-27 highlights: the source of the BE figures used as denominators.

16. NCERT Concepts to Revise

• Fiscal deficit (Economy): The note's central test is whether the 4.3%-of-GDP fiscal deficit target is met; H1 numbers approximate it.
• Divisible pool (Economy): The 41% share applies to this pool, which excludes cesses and surcharges, shrinking what States actually get.
• Cess (Economy): Cesses sit outside the divisible pool, driving States' complaint that 41% on paper is far less in reality.
• Off-budget borrowing (Economy): CAG found borrowing via IRFC and PFC that hides the true deficit, which monthly accounts cannot show.
• Interest payments (Economy): Interest takes about a quarter of spending, squeezing fiscal room for development and capital expenditure.
• Non-debt creating capital receipts (Economy): Total Receipts include these but exclude borrowings, a key point for reading the monthly accounts correctly.

17. Common Errors / Trap Areas

• CGA vs CAG: the monthly accounts are compiled by the Controller General of Accounts (Ministry of Finance), not the Comptroller and Auditor General, who audits (not checked against a whitelisted source).
• "Total Receipts" ≠ all inflows: they exclude borrowings. Don't treat the receipts figure as the full financing of the expenditure [1].
• Net vs Gross tax: the reported tax figure is net of devolution. Devolution is a separate line item [1].
• 41% is of the divisible pool, not gross tax revenue: cesses, surcharges and the cost of collection are excluded [6].
• Two capex growth rates: PRS gives +11.5% over RE 2025-26, PIB gives ~9% over BE 2025-26. The baselines differ, so check which one an MCQ uses [3][4].