Amid global uncertainties, the Centre stepped up capital and revenue expenditure in April, leading to a near doubling of the fiscal deficit year-on-year to 21.4% of the annual target, according to official data released on Monday.
Data for the first month of FY27 showed that the Centre achieved 6.2% of the annual target in net tax revenues compared with 6.7% in the year-ago month. During the month, non-tax revenues were 3.6% of the annual target, compared to 11.5% in the year-ago month. Non-debt capital receipts also trailed the achievement compared to the year-ago period.
“While fiscal risks abound in the form of higher-than-budgeted fertiliser and LPG subsidies, and shortfalls in excise duty, corporate tax and dividend from the OMCs, a portion of the stress would be absorbed by higher import duty on gold and silver and the balance in the Economic Stabilisation Fund,” rating agency ICRA said.
“While we estimate the slippage in the fiscal deficit at around 0.3% of GDP relative to the FY27 BE, the incremental borrowing requirement would be softened by the higher opening cash balance vis-a-vis the BE, partly benefiting from the overshooting in small savings collections in FY2026,” it said.
The inflows from savings deposits and certificates and PPF exceeded the FY26RE by around Rs 1 lakh crore, higher than expected. This led to an increase in the Centre’s cash balance, as against the Rs 45,721 crore drawdown envisaged as per the RE.
This is expected to provide some cushion to the Centre’s fiscal position in FY27, and prevent any fiscal slippage from translating into an equivalent increase in market borrowings, it said.
The Controller General of Accounts data showed that the Centre met the fiscal deficit target of 4.4% of GDP in 2025-26 with minimal reduction in expenditure as reported by FE last week. In FY26, the Centre achieved 98% of the net tax revenue while non-tax revenues were 101.7% of the revised estimate (RE) and non-debt capital receipts were 131% of the estimate. Revenue expenditure was 99.1% of the FY26RE while capex was about 98% of the RE.
In FY26, the fertiliser subsidy overshot the revised estimate by 13% to 2.11 lakh crore.
TOPICSfiscal deficitThis article was first uploaded on June one, twenty twenty-six, at nineteen minutes past nine in the night. © The Indian Express (P) Ltd