Apr-July fiscal gap touches 26.8% of full-year target

The Centre's fiscal deficit in April-July of FY27 reached ₹4.55 lakh crore, marking 26.8% of the Budget Estimate for the entire financial year, according to official data released on Monday. This figure represents a 2.77% decrease compared to the same period in the previous year, when the deficit stood at ₹4.68 lakh crore.

The fiscal deficit narrowed by 21.5% year-on-year in July, reaching ₹1.47 lakh crore, thanks to a rise in total receipts relative to total expenditure. This suggests a stable fiscal position despite the ongoing West Asia crisis. The Centre had set a fiscal deficit target of 4.3% of GDP, or ₹16.96 lakh crore, for the current fiscal year.

By July, spending on major subsidies amounted to ₹1.54 lakh crore, accounting for 37% of the ₹4.11 lakh crore budgeted for the entire year. This figure was higher than the 30% utilisation recorded in the same period of the previous year, driven by a sharp reduction in the revenue deficit, despite a 30% surge in capital expenditure (capex), said ICRA chief economist Aditi Nayar.

According to Controller General of Accounts (CGA) data, the Centre's net tax revenue stood at about ₹8.45 lakh crore, or 29.5% of the total receipts budget estimate for FY27. Meanwhile, total expenditure reached ₹17.62 lakh crore by July, or 32.9% of the full-year budget estimate, while total receipts were ₹13.07 lakh crore, or 35.8% of the annual estimate.

Capex emerged as a significant component of spending during the first four months of FY27, with the Centre spending ₹4.51 lakh crore, or 36.9% of the annual allocation, compared to 30.9% in the corresponding period last year. Loans worth ₹1.26 lakh crore were disbursed during this period, accompanied by interest payments totaling ₹4.27 lakh crore.