India’s Fiscal Deficit Rises To 9.6% Of FY27 Target In April–May

India’s fiscal deficit widened to 9.6% of the full-year target in the first two months of FY27, as government expenditure increased at a faster pace than revenue receipts, according to data released by the Controller General of Accounts (CGA) on June 30.

In absolute terms, the fiscal deficit stood at ₹1.62 lakh crore during April–May, compared with the full-year Budget Estimate of ₹16.96 lakh crore.

In the same period of the previous fiscal year, the deficit was significantly lower at ₹13,163 crore, or 0.8% of the annual target.

The widening gap was primarily driven by higher government spending. Total expenditure during April–May stood at ₹8.81 lakh crore, accounting for 16.5% of the Budget Estimate, compared with 14.7% in the corresponding period of FY26.

Within this, revenue expenditure increased to 15.3% of the annual target from 13.3% a year earlier, while capital expenditure also rose to 20.5% of the BE, slightly higher than 19.7% in the same period last year.

On the revenue side, collections were marginally weaker compared to the previous year. Total receipts stood at ₹7.19 lakh crore, or 19.7% of the Budget Estimate, down from 21% a year earlier.

Revenue receipts came in at ₹6.99 lakh crore, representing 19.8% of the annual target versus 20.7% in the same period last year.

Net tax revenue stood at ₹3.48 lakh crore, accounting for 12.1% of the Budget Estimate, slightly lower than 12.4% in the corresponding period of FY26.

However, non-tax revenue provided significant support, coming in at ₹3.51 lakh crore or 52.7% of the annual target, though still below last year’s 61.2% level.

This strength was largely supported by the Reserve Bank of India’s record surplus transfer of ₹2.86 lakh crore for FY26.

Non-debt capital receipts remained weak at ₹19,664 crore, or 16.6% of the Budget Estimate, compared with 33.2% a year earlier.

Disinvestment and other capital receipts also declined sharply to ₹13,627 crore, or 17% of the target, versus 48.1% last year.

Meanwhile, the revenue deficit stood at ₹68,985 crore, while the primary deficit—excluding interest payments—was ₹19,107 crore.

For FY27, the government has set a fiscal deficit target of 4.3% of GDP, slightly lower than the revised 4.4% target for FY26.