India’s Fiscal Deficit Widens to ₹1.62 Lakh Crore in April-May, Touches 9.6% of FY27 Target

New Delhi: The Centre on Tuesday said that India’s fiscal deficit widened to Rs 1.62 lakh crore during April-May of FY27, compared with Rs 13,200 crore in the corresponding period last year. The country’s fiscal deficit touched 9.6 per cent of the FY27 budget target at the end of May, according to data released by the Controller General of Accounts (CGA).

The fiscal deficit, or gap between the government's expenditure and revenue, was Rs 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 had reduced to 0.8 per cent of the BE of 2025-26 or Rs 13,163 crore,” the CGA said.

The Centre has set a fiscal deficit target of 4.3 per cent of the GDP or Rs 16.96 lakh crore in the current fiscal. As per the CGA data, net tax receipts stood at Rs 3.48 lakh crore, while non-tax receipts were Rs 3.51 lakh crore. The total expenditure of the central government stood at Rs 8.81 lakh crore at the end of May, including capital expenditure of Rs 2.51 lakh crore.

Icra chief economist Aditi Nayar said the fiscal expansion during April-May was driven by an 18 per cent surge in total expenditure and the 1-2 per cent contraction in net tax receipts and non-tax revenues. “The government's gross tax revenues rose by a muted 1.8 per cent year-on-year during April-May of FY27, led by the sharp 20 per cent contraction in excise duty collections, following the pairing of such duties on petrol and diesel,” Nayar said.

Corporate tax collections and customs duty collections posted a strong growth in April-May FY27, even as income tax collections rose by a relatively sluggish 6.8 per cent, much lower than the 17.7 per cent growth required in FY27 to meet the BE for the fiscal. On the expenditure side, revenue expenditure surged by 20.1 per cent due to a sharp rise in subsidies and interest payments. Capital expenditure expanded by 13.4 per cent during 2M FY2027, which will support GDP growth in the first quarter.

“Looking ahead, the sharp dip in global energy prices following the cooling of tensions in West Asia has improved the outlook for the GoI's fiscal position in FY2027. Icra now expects only a marginal overshooting in the Centre's fiscal deficit vis-a-vis the target of 4.3 percent of GDP for FY2027 against the previous estimate of a 40 basis points slippage, which assumed an average crude oil price of $95/barrel for the fiscal,” Nayar added.