The Centre's gross tax revenue grew a modest 3.7% year-on-year in the first quarter of FY27, weighed down by a sharp decline in excise duty collections following fuel tax cuts and relatively subdued growth in overall GST receipts.
Excise duty collections fell 22.4% to Rs 43,149 crore during April-June FY27, compared with Rs 55,605 crore in the corresponding period last year. In contrast, customs duty collections surged over 36%, aided by higher duties on precious metals and elevated commodity prices.
In March, the government cut excise duty on petrol and diesel by Rs 10 per litre to shield consumers from a sharp rise in international crude oil prices amid the Iran conflict. According to sources, the Centre absorbed a revenue hit of over Rs 1 lakh crore to support oil marketing companies (OMCs), which refrained from raising retail fuel prices for 78 days following the onset of the conflict.
According to the latest Union Government Accounts released on Friday, gross tax revenue stood at Rs 9.01 lakh crore in the April-June quarter of FY27, up from Rs 8.69 lakh crore in the year-ago period.
Central GST (CGST) collections rose 17% to Rs 2.71 lakh crore during the quarter from Rs 2.32 lakh crore a year earlier. However, overall GST revenue growth remained muted due to weaker Integrated GST (IGST) collections.
On the expenditure side, the government's revenue expenditure increased 7.4% in the first quarter despite a double-digit contraction in interest payments. Subsidy expenditure jumped 37%, led by higher fertiliser subsidies. Excluding interest payments and subsidies, revenue expenditure registered a robust growth of 16.4%.
Capital expenditure (capex) expanded 24% during the quarter, driven by a 66% jump in June. Meanwhile, the fiscal deficit widened 9.6% year-on-year to Rs 3.08 lakh crore, accounting for 18% of the FY27 Budget Estimate of Rs 16.95 lakh crore.
“We currently peg the net impact of the West Asia conflict on the Government of India's fiscal position at Rs 1.25 lakh crore, or 0.2% of GDP, assuming an average oil price of $80-85 per barrel in FY27. However, this could be offset by expenditure savings, which have ranged from Rs 1.8-2.6 lakh crore during FY2018-25, suggesting that second-half borrowings may not need to be enhanced,” said Aditi Nayar, Chief Economist, ICRA.
