India’s Fiscal Deficit Narrows in April-July

India’s fiscal deficit stood at INR 4.6 trillion in April-July 2026-27, down from INR 4.7 trillion a year earlier, reaching 26.8% of the full-year target versus 29.9% previously. Total expenditure rose 12.7% year-on-year to INR 17.6 trillion, while capital spending increased to INR 4.5 trillion from INR 3.5 trillion, reaching 36.9% of the annual target. Total receipts rose 19.3% to INR 13.1 trillion, supported by higher net tax revenues of INR 8.5 trillion, up from INR 6.6 trillion. India targets a fiscal deficit of INR 17.0 trillion, or 4.3% of GDP, for 2026-27.

India's fiscal deficit surged to INR 3.1 trillion in the first quarter of FY2027 from INR 280 billion in the corresponding period of the previous year. This was equivalent to 28.7% of the current budget estimate, which is commonly depleted toward the end of the fiscal year, compared to 26.7% in the previous year. As a net energy importer, the country is grappling with rising fuel subsidy costs due to elevated oil prices linked to the ongoing Middle East conflict. Total expenditure surged 11.0% year-on-year to INR 13.5 trillion (25.4% of budgeted amount), while total receipts rose by 11.5 to INR 10-5 trillion (28.7% of the budgeted amount).

India’s fiscal deficit widened sharply to INR 1.6 trillion in April-May 2026-27, up from INR 0.1 trillion a year earlier, reaching 9.6% of the full-year target compared to 0.8% in the same period last year. As a net energy importer, the country is grappling with rising fuel subsidy costs due to elevated oil prices linked to the ongoing Middle East conflict. Total expenditure surged 18.1% year-on-year to INR 8.8 trillion (16.5% of the target), while capital spending, primarily on infrastructure, rising to INR 2.5 trillion (20.5% of the annual plan, up from INR 2.2 trillion). Meanwhile, total receipts declined by 2% to INR 7.2 trillion (19.7% of the annual goal), including net tax revenues of INR 3.5 trillion, unchanged from a year ago. India has set its fiscal deficit target for 2026-27 at 4.3% of GDP, or INR 17.0 trillion.