NEW DELHI: India’s fiscal deficit was estimated at Rs 3.1 lakh crore during the first quarter (April-June) of the current financial year, which works out to 18.2 per cent of the full-year budget estimate, according to data released by the Controller General of Accounts (CGA) on Friday.

 

The fiscal gap was higher than the Rs 2.8 lakh crore recorded during the April-June period of the previous financial year, showing increased government spending even as revenue collections remained robust.

 

For FY27, the Centre has budgeted a fiscal deficit of Rs 16.96 lakh crore, equivalent to 4.3 per cent of the country's gross domestic product (GDP), along a declining gliding path as part of the fiscal consolidation process.

 

Net tax receipts during the April-June quarter recorded a robust increase to Rs 6.4 lakh crore from Rs 5.4 lakh crore in the corresponding period last year, indicating sustained growth in direct and indirect tax inflows despite global economic uncertainties.

 

Non-tax revenue rose to Rs 3.8 lakh crore from Rs 3.7 lakh crore in the same quarter of 2025-26. These receipts include dividends from public sector companies and the Reserve Bank of India, spectrum-related income and various fees collected by the government.

 

The total expenditure of the government rose to Rs 13.6 lakh crore during the April-June quarter of 2026-27 compared with the corresponding figure of Rs 12.2 lakh crore in the same quarter last year.

 

Capital expenditure, which includes investments in large infrastructure projects such as ports, highways, and railway projects, recorded a significant increase during the quarter at Rs 3.4 lakh crore, compared with Rs 2.75 lakh crore in the same period last year.

 

There is some concern that the rising subsidy bill due to the higher prices of petroleum products and fertilisers will lead to an increase in government expenditure on this account, which could exert pressure on the fiscal deficit.

 

The government achieved its fiscal deficit target of 4.4 per cent in the financial year 2025-26 and has lowered the target further to 4.3 per cent of GDP for the current financial year as part of the fiscal consolidation process.

 

A decline in the fiscal deficit strengthens the fundamentals of the economy and paves the way for growth with price stability. It leads to a reduction in borrowing by the government, thus leaving more funds in the banking sector for lending to corporates and consumers, which leads to higher economic growth.