India’s fiscal deficit touched nearly 42% of the full-year target at the end of August, reaching Rs 7.1 lakh crore during April-August of 2026-27, data released by the Controller General of Accounts (CGA) on Wednesday showed. In the corresponding period last year, the fiscal deficit stood at Rs 5.98 lakh crore, or 38.1% of the Budget estimates (BE).
The Centre’s capital expenditure rose 18% year-on-year to Rs 5.09 lakh crore during April-August.
“Based on fiscal data for five months of 2026-27 provided by the CGA, some fiscal pressures are becoming apparent. GoI’s gross tax revenues (GTR) in this period showed a year-on-year growth of only 6.5%, which translated to a growth of 3.4% in net tax revenues after transfers to the states. Direct taxes showed a fall in their monthly growth rates in August 2026,” said DK Srivastava, chief policy advisor, EY India.
The higher utilisation of the fiscal deficit came as the government increased expenditure on major subsidies by 24.37% year-on-year to Rs 1.87 lakh crore from Rs 1.50 lakh crore during the same period last year. Food and urea subsidies rose by nearly 30% and 27.8%, respectively, pushing up overall subsidy expenditure.
Subsidy expenditure had already reached 46% of the Budget estimate, compared with 39% during the corresponding period last year.
“Major subsidies show a growth of 24.4% in this period, which is not unexpected given the continuing global crude-related pressures. Revenue and fiscal deficits stood at 46.5% and 41.9% of their respective annual budget estimates. Overall, GoI’s fiscal aggregates indicate that the government is on course for realising its fiscal deficit target for 2026-27 in spite of the global headwinds,” Srivastava said.
According to the CGA, the Centre’s net tax revenue up to August stood at Rs 8.38 lakh crore, or 29.2% of the 2026-27 Budget target.
