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

New Delhi: The Center on Tuesday said India’s fiscal deficit widened to Rs 1.62 lakh billion in the April-May period of FY27, compared to Rs 13,200 billion in the same period last year. The country’s fiscal deficit reached 9.6 percent of the FY27 budget target at the end of May, according to data released by the Comptroller General of Accounts (CGA).

The fiscal deficit, or the difference between the government’s expenditure and revenues, was Rs 1.62 lakh crore in value terms at the end of May 2026, according to data released by the Controller General of Accounts (CGA). “At the end of May 2025, the Centre’s fiscal deficit reduced to 0.8 per cent of 2025-26 BE or Rs 13,163 million,” CGA said.

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

Executive chief economist Aditi Nayar said the fiscal expansion during April-May was driven by an 18 per cent increase in total expenditure and a 1-2 per cent contraction in net tax revenues and non-tax revenues. “The government’s gross tax revenues showed a slight increase of 1.8 per cent on an annual basis during April-May of FY27, driven by a sharp contraction of 20 per cent in excise duty collections following matching of taxes on petrol and diesel,” Nayar said.

Corporate tax collections and customs duty collections registered strong growth in the April-May FY, although income tax collections grew at a relatively slow pace of 6.8 per cent for the fiscal year, much lower than the 17.7 per cent growth required in FY27 to meet the BE. On the expenditure side, revenue expenditure increased by 20.1 percent due to a sharp increase in subsidies and interest payments. Capital expenditure increased by 13.4 percent in the 2-month fiscal 2027, which will support GDP growth in the first quarter.

“Looking ahead, the sharp decline in global energy prices following the cooling of tensions in West Asia has improved the outlook for the GoI’s fiscal position in FY 2027. The Executive expects only a marginal overshoot in the Centre’s fiscal deficit against the target of 4.3 per cent of GDP for FY 2027, compared to the previous forecast of a 40 basis point decline assuming the average crude oil price for the fiscal year at $95 per barrel.” Nayar added.