Fiscal deficit rises to ₹7.14 trillion or 42.1% of FY27 target in first six months

New Delhi: India's fiscal deficit widened in the first six months of FY27, as capital spending and subsidy outlays continued to rise.

Fiscal deficit, or the gap between government expenditure and receipts, stood at ₹7.14 trillion at the end of September, latest data from the Controller General of Accounts (CGA) showed. This amounts to 42.1% of the full-year budget estimate, higher than 36.5% in the corresponding period of the previous year. At the end of August, the fiscal deficit had stood at 41.9% of the annual target.

The higher proportion of the budgeted fiscal deficit already incurred in the first half of FY27 indicates mounting pressure on the government's fiscal balance, with expenditure growing faster than the pace of deficit accumulation seen in the year-ago period. The Centre has budgeted a fiscal deficit of ₹16.96 trillion, or 4.3% of GDP, for FY27. It is relying on robust tax collections and higher non-tax revenues in the coming months to meet this target.

The fiscal deficit is typically financed through borrowings. The widening gap assumes significance as the government has cut its FY27 market borrowing by nearly ₹1.2 trillion and now plans to raise ₹7.86 trillion through dated government securities in the second half of the fiscal year, as Mint reported on 25 September. The Centre now expects to borrow ₹15.995 trillion through dated securities during FY27, compared with ₹17.2 trillion estimated in the Union budget, according to the finance ministry's borrowing plan released in consultation with the Reserve Bank of India (RBI) on 25 September.

The latest data showed that total government expenditure reached ₹25.50 trillion by September, equivalent to 47.7% of the full-year budget estimate, while total receipts stood at ₹18.35 trillion, or 50.3% of the annual estimate.

The receipts included ₹12.76 trillion in tax revenue (net to the Centre), ₹4.81 trillion in non-tax revenue and ₹78,602 crore under non-debt capital receipts. Revenue receipts stood at ₹17.57 trillion, or 49.7% of the budget estimate, by September. Net tax revenue reached 44.5% of the annual budget estimate of ₹28.67 trillion, while non-tax revenue reached 72.2% of the ₹6.66 trillion budgeted for the year.

The Centre also received ₹78,602 crore through non-debt capital receipts, comprising ₹16,443 crore in loan recoveries and ₹62,159 crore under other receipts. Non-debt capital receipts were 66.4% of the ₹1.18 trillion budget estimate.

The government had budgeted ₹36.52 trillion in total receipts for FY27, including revenue receipts and non-debt capital receipts.

Capital expenditure gathered pace during the period, reaching ₹6.55 trillion, or 53.6% of the full-year budget estimate of ₹12.22 trillion, compared with 51.8% in the corresponding period last year. This indicates that the Centre has already utilized more than half of its planned capital spending in the first six months of the financial year.

Loans disbursed during the period stood at ₹1.51 trillion, or 54.2% of the ₹2.79 trillion budget estimate for FY27.

Interest payments amounted to ₹6.46 trillion, representing 46% of the ₹14.04 trillion budgeted for FY27. The corresponding figure a year earlier was 45.3% of the annual allocation.

Spending on major subsidies stood at ₹2.23 trillion during April-September, or 54% of the ₹4.11 trillion budgeted for FY27. This was higher than the 53% utilization recorded in the corresponding period of the previous year. Urea subsidy spending reached ₹85,586 crore, or 73% of the ₹1.17 trillion full-year allocation, compared with 66% utilization during the same period last year.

Meanwhile, spending under the nutrient-based fertilizer subsidy stood at ₹33,664 crore, representing 62% of its ₹54,000 crore annual allocation, compared with 60% a year earlier.

Food subsidy expenditure stood at ₹1.03 trillion, or 45% of the ₹2.28 trillion budget allocation, compared with 43% utilization in the corresponding period of the previous year. The food subsidy is primarily incurred on providing free foodgrains to eligible beneficiaries under the National Food Security Act (NFSA) through the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

Petroleum subsidy expenditure was ₹1,149 crore, or 10% of the ₹12,085 crore annual allocation, compared with 56% utilization a year earlier.

The Centre's revenue deficit stood at ₹1.38 trillion by September, equivalent to 23.4% of the ₹5.92 trillion budget estimate for the full year. The corresponding figure was 5.2% of the annual target in the previous year.

About the Author

Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.