The Centre’s fiscal deficit has touched ₹7.1 lakh crore in the first five months of FY27, which is about 41.9% of the full-year target.
A big part of the spending increase is coming from capex, which is up around 18% YoY. At the same time, subsidy spending has jumped nearly 25% to ₹1.87 lakh crore, with food and fertiliser taking up a big chunk of it. Food subsidy alone is up almost 30%.
Then there’s the revenue side. Net tax collections were around ₹8.38 lakh crore, while gross tax revenue grew only 6.5%. Excise collections also fell 23%, partly because of the petrol and diesel duty cuts earlier this year.
So the government is spending more, while some parts of revenue aren’t growing at the same pace.
ICRA estimates the fiscal deficit could overshoot the budget estimate by around ₹1.3–1.4 lakh crore, although expenditure savings and stronger small-savings inflows could provide some cushion.
The government is still targeting a 4.3% fiscal deficit for FY27, so the next few months should be worth watching to see how the numbers settle.