India’s fiscal deficit was Rs 1.6 lakh crore in the first two months of the 2026-’27 financial year, reaching 9.6% of the government’s annual target, the Business Standard cited government data as showing.
This was 12 times the percentage of the annual target recorded during the same period last year, when it was 0.8%.
A fiscal deficit arises when the government’s expenditure exceeds the revenue it earns in a financial year.
The increase came despite a record Rs 2.8 lakh crore surplus transfer from the Reserve Bank of India in May, the newspaper reported.
Revenue receipts fell to Rs 6.9 lakh crore in April and May from Rs 7 lakh crore a year earlier, according to data released by the Controller General of Accounts on Tuesday.
Both tax revenue and non-tax revenue declined by 1% year on year. Total receipts fell 2% to Rs 7.1 lakh crore, or nearly 20% of the government’s annual revenue target, the Business Standard reported.
Within tax revenue, excise duty collections fell nearly 20% to Rs 2.1 lakh crore. In March, the government cut the special additional excise duty on petrol to Rs 3 per litre from Rs 13 per litre and on diesel to zero from Rs 10.
At the same time, government spending increased. Total expenditure rose 18% year on year to Rs 8.8 lakh crore, while revenue expenditure increased 20% to Rs 6.3 lakh crore, Business Standard reported.
Capital expenditure, which includes spending on infrastructure and other long-term projects, rose more than 13% to Rs 2.5 lakh crore, Reuters reported.
This means the government has already spent about 21% of its full-year capital expenditure target of Rs 12.2 lakh crore in the first two months of the 2026-’27 financial year, Business Standard reported.
In May alone, the government recorded a fiscal surplus of nearly Rs 2 lakh crore after receiving the RBI’s record surplus transfer.
The payment lifted non-tax revenue for the month by nearly 13% to Rs 3.2 lakh crore.
This is the third consecutive year that the government has recorded a fiscal surplus in May because of the central bank’s dividend.
Every year, the central bank pays a dividend to the government to help with the finances from its surplus or profit. It serves as a key source of revenue for the government.
Edited by Tanya Shrivastava.
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