April-May fiscal deficit at 9.6% of FY27 budget target

PTI

New Delhi

India's fiscal deficit touched 9.6% of the FY27 Budget target at the end of May, government data showed on Tuesday.

The fiscal deficit—the gap between the government’s expenditure and revenue—was ₹1.62 lakh crore in value terms at the end of May 2026, data released by the Controller General of Accounts (CGA) showed. At the end of May 2025, the Centre’s fiscal deficit stood at 0.8% of the budget estimate of 2025-26, or ₹13,163 crore. The Centre has set a fiscal deficit target of 4.3% of the GDP, or ₹16.96 lakh crore, for the current fiscal.

According to CGA data, net tax receipts stood at ₹3.48 lakh crore, while non-tax receipts were ₹3.51 lakh crore. The total expenditure of the central government stood at ₹8.81 lakh crore at the end of May, including capital expenditure of ₹2.51 lakh crore.

Icra Chief Economist Aditi Nayar said the fiscal expansion during April-May was driven by an 18% surge in total expenditure and a 1–2% contraction in net tax receipts and non-tax revenues. The government's gross tax revenues rose by a muted 1.8% year-on-year during April-May, led by a sharp 20% contraction in excise duty collections following the reduction of duties on petrol and diesel.

Corporate tax and customs duty collections posted strong growth in April-May, even as income tax collections rose by a relatively sluggish 6.8%, significantly lower than the 17.7% growth required in FY27 to meet the budget estimate. On the expenditure side, revenue expenditure surged by 20.1% due to a sharp rise in subsidies and interest payments. Capital expenditure expanded by 13.4% during the first two months of FY2027.

"Looking ahead, the sharp dip in global energy prices following the cooling of tensions in West Asia has improved the outlook for the Government of India’s fiscal position in FY2027," Nayar said. Icra now expects only a marginal overshooting in the fiscal deficit target for FY2027 against the previous estimate of a 40 basis points slippage.

Icra now expects only a marginal overshooting in the Centre's fiscal deficit vis-a-vis the target of 4.3% of GDP for FY2027