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The Centre’s fiscal deficit was contained at 26.8% of the annual target in the first four months of FY27, aided by strong revenue growth even as capex surged.
The Centre’s fiscal deficit was at 29.9% of the relevant annual target in April-July of FY26.
The Centre’s net tax collections rose by a healthier 27.6% in April-July of FY27, amidst a contraction in tax devolution to the states, as four tranches of devolution have been shared with the states in April-July compared with five in April-July in the previous year.
“With two tranches being shared in August 2026 vs. one in August 2025, the pace of growth will normalise and come closer to that of gross tax revenues,” rating agency ICRA chief economist Aditi Nayar said
The centre’s capital expenditure grew by a robust 30% on year in April-July of the current financial year, reflecting the government’s thrust to provide support to economic activity.
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The Centre’s gross tax revenues rose by 11% on year in April-July 2026, led by over 20% growth in direct taxes, aided by a lower base, and a 38% growth in customs duty collections aided by the hike in duties on gold and silver.
“Based on the FY2027 BE and the provisional 4M trends, the GoI’s GTR needs to expand by 8.7% YoY in the remaining eight months of FY2027 to achieve the budgeted target of Rs. 44.0 trillion for the fiscal,” Nayar said.
While this seems modest compared to our current expectation of a double-digit nominal GDP growth for the fiscal, some shortfall is likely on account of union excise duty collections following the duty cut on petrol and diesel, and PIT collections (barring STT), which need to expand by around 15% during the remainder of the fiscal. These would be partly offset by higher-than-budgeted collections on the customs duty front, aided by the duty hikes on gold and silver imports, she added.
TOPICSECONOMYfiscal deficitThis article was first uploaded on September one, twenty twenty-six, at seventeen minutes past twelve in the am. © IE Online Media Services (P) Ltd