India’s fiscal deficit widened sharply to INR 1.6 trillion in April–May 2026–27, from just INR 0.1 trillion a year earlier, reaching 9.6% of the full-year target compared with 0.8% in the same period last year. As a net energy importer, the country is facing higher fuel subsidy costs amid elevated oil prices linked to the ongoing Middle East conflict.
Total expenditure jumped 18.1% year-on-year to INR 8.8 trillion, or 16.5% of the full-year target. Capital expenditure, driven largely by infrastructure projects, rose to INR 2.5 trillion—20.5% of the annual plan—up from INR 2.2 trillion a year earlier.
In contrast, total receipts slipped 2% to INR 7.2 trillion, equivalent to 19.7% of the yearly goal. This includes net tax revenues of INR 3.5 trillion, unchanged from the prior year. India has set its fiscal deficit target for 2026–27 at 4.3% of GDP, or INR 17.0 trillion.
