India’s Fiscal Deficit Eases, April-July Gap Falls To 26.8% Of FY27 Target
· Free Press Journal
New Delhi: India’s fiscal deficit declined during the first four months of financial year 2026-27, helped by higher receipts and a larger dividend transfer from the Reserve Bank of India.
The fiscal deficit stood at Rs 4.55 lakh crore during April-July, equivalent to 26.8 percent of the government’s full-year target, according to official data released on Monday.
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During the corresponding period of FY26, the deficit was Rs 4.70 lakh crore, or 29.9 percent of the full-year estimate.
Receipts Outpace Spending
The government’s total receipts reached Rs 13.07 lakh crore during April-July, accounting for 35.8 percent of the Budget Estimate for FY27.
Overall expenditure stood at Rs 17.62 lakh crore, representing 32.9 percent of the annual target.
In the same period last year, receipts were 31.3 percent of the Budget Estimate, while expenditure accounted for 30.9 percent.
Revenue receipts totalled Rs 12.68 lakh crore. This included tax revenue of Rs 8.45 lakh crore and non-tax revenue of Rs 4.23 lakh crore.
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The improvement in non-tax revenue was supported by the RBI’s record dividend transfer of Rs 2.87 lakh crore to the Central government. This was higher than the Rs 2.69 lakh crore transferred in the previous year.
Non-tax revenue also includes dividends from public sector companies, spectrum-related income and fees collected by government departments.
India’s revenue deficit stood at Rs 43,645 crore during April-July, equivalent to 7.4 percent of the full-year Budget target.
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The government achieved its fiscal deficit target of 4.4 percent of GDP in FY26. It has lowered the target to 4.3 percent for FY27 as part of its fiscal consolidation plan.
However, elevated petroleum and fertiliser prices due to the West Asia crisis could increase the subsidy bill and put pressure on government spending.
A lower fiscal deficit can reduce government borrowing, improve economic stability and leave banks with more funds to lend to businesses and consumers. This can support investment and growth while helping maintain price stability.