Centre’s Fiscal Deficit Touches 9.6% Of FY27 Target In April-May Amid Higher Spending

The Central government’s fiscal deficit reached ₹1.62 lakh crore during the first two months of FY27, accounting for 9.6% of the full-year Budget Estimate (BE) of ₹16.96 lakh crore, according to data released by the Controller General of Accounts (CGA) on June 30. The higher deficit reflected a faster pace of expenditure during April and May compared with the growth in government receipts.

During the same period last year, the fiscal deficit stood at ₹13,163 crore, representing 0.8% of the annual target.

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Government Spending Picks Up

Government expenditure during April-May amounted to ₹8.81 lakh crore, or 16.5% of the FY27 Budget Estimate. This was higher than the 14.7% recorded during the corresponding period of FY26.

Revenue expenditure reached 15.3% of the annual target, compared with 13.3% a year earlier. Capital expenditure also gathered pace, touching 20.5% of the Budget Estimate against 19.7% in the same period last year, indicating continued spending on infrastructure and asset creation.

Receipts Grow At A Slower Pace

The government income was ₹7.19 lakh crore during the first two months of the fiscal year 27, which is 19.7% of the total revenue budget of the fiscal year. This is less than the 21% collected in April and May of the previous financial year.

The revenue receipts recorded were ₹6.99 lakh crore, making up 19.8% of the total Budget Estimates, as against 20.7% in the previous financial year. Net tax revenue came in at ₹3.48 lakh crore, accounting for 12.1% of the annual target, slightly below the 12.4% recorded a year earlier.

Non-Tax Revenue Remains Strong

Non-tax revenue continued to provide significant support to government finances. Collections stood at ₹3.51 lakh crore during April-May, or 52.7% of the Budget Estimate. Although lower than the 61.2% recorded in the same period last year, the figures remained strong following the Reserve Bank of India’s surplus transfer of ₹2.86 lakh crore to the Centre for FY26.

Meanwhile, non-debt capital receipts were relatively weaker at ₹19,664 crore, representing 16.6% of the annual target, compared with 33.2% during the corresponding period last year.

Other capital receipts, including proceeds from disinvestment, totalled ₹13,627 crore, or 17% of the Budget Estimate, significantly lower than the 48.1% achieved in April-May FY26.

Other Fiscal Indicators

The CGA data showed the revenue deficit at ₹68,985 crore during April-May, while the primary deficit, which excludes interest payments, stood at ₹19,107 crore.

For FY27, the Union Budget has set the fiscal deficit target at 4.3% of GDP, improving from the revised estimate of 4.4% for FY26. The government’s fiscal position over the coming months will depend on the pace of revenue collections, capital spending and progress on disinvestment as it works toward achieving the annual deficit target.