India's Fiscal Deficit Hits 9.6% of Budget Estimates Amid Increased Infrastructure Spending

Overview of India's Fiscal Deficit and Expenditure

For the period of April to May, India's fiscal deficit reached 9.6% of the budget estimates for the financial year concluding on March 31, amounting to Rs 1.62 trillion (approximately $17.11 billion), according to government data released on Tuesday. In the same timeframe last year, the fiscal deficit was recorded at Rs 131.6 billion. The government has set a fiscal deficit target of 4.3% of the GDP, which translates to Rs 16.96 trillion for FY27.

The data indicates that net tax receipts totaled Rs 3.5 trillion, while non-tax revenue also stood at Rs 3.5 trillion, a slight decrease from Rs 3.6 trillion during the same period last year. Additionally, total government expenditure increased to Rs 8.8 trillion, up from Rs 7.5 trillion a year prior. Notably, capital expenditure on physical infrastructure rose to Rs 2.5 trillion from Rs 2.2 trillion in the previous year.

As of May 2026, the Government of India has collected Rs 7,18,669 crore, which is 19.7% of the budget estimates for total receipts for 2026-27. This includes Rs 3,48,138 crore from tax revenue (net to the Centre), Rs 3,50,867 crore from non-tax revenue, and Rs 19,664 crore from non-debt capital receipts. Furthermore, Rs 1,75,557 crore has been allocated to state governments as tax devolution, which is Rs 12,086 crore more than the previous year.

The total expenditure by the Government of India stands at Rs 8,81,023 crore, accounting for 16.5% of the corresponding budget estimates for 2026-27. Out of this, Rs 6,30,020 crore is allocated for revenue accounts, while Rs 2,51,003 crore is designated for capital accounts. Within the total revenue expenditure, Rs 1,81,461 crore is earmarked for interest payments, and Rs 75,542 crore is allocated for major subsidies.