India's expenditure and income gap gets narrower

India's fiscal deficit for the first four months of the current fiscal year narrowed to 26.8% of estimates, down from 29.9% in the same period last year, according to government data released today. The total receipts for the April to July period stood at Rs 13.07 lakh crore, which is 35.8% of the year's budget target, while overall expenditure was Rs 17.62 lakh crore, accounting for 32.9% of the target.

Total receipts for the current fiscal year were 31.3% of the estimate, with revenue receipts at Rs 12.68 lakh crore. Of this, tax revenue contributed Rs 8.45 lakh crore, and non-tax revenue, which includes dividends from public sector enterprises and income from the Reserve Bank of India, was Rs 4.23 lakh crore. Notably, non-tax revenue surged due to the Reserve Bank of India approving a dividend of Rs 2.87 lakh crore to the central government, up from Rs 2.69 lakh crore last year.

The revenue deficit for the fiscal year was 7.4% of the budget target, amounting to Rs 43,645 crore. During her presentation of the Union Budget for FY27, Finance Minister Nirmala Sitharaman had set the fiscal deficit target at 4.3% of GDP for the financial year, reaffirming the government's commitment to fiscal consolidation and controlling the budget gap.

On the expenditure side, the central government spent approximately Rs 1.54 lakh crore on major subsidies, including food, fertilizers, and petroleum, which was 37% of the annual target, compared to 30% in the same period last year.