India's fiscal deficit for the April-July period reached ₹4.55 trillion, representing 27% of the target for the financial year ending March 31, according to government data released on Monday by the Controller General of Accounts (CGA). This performance indicates the government is maintaining firm control over its finances despite significant increases in capital spending. The deficit shows improvement from the previous year's performance, with the government achieving 30% of the target in April-July last year compared to 27% this year. As per Business Standard, the current fiscal deficit represents a ₹150 billion decrease compared to the same period last year, when the deficit stood at ₹4.7 trillion. The deficit has also narrowed substantially from 29.9% reported in the comparable year-earlier period, demonstrating the government's enhanced fiscal discipline.
The Centre has achieved 37% of its capital expenditure target in the first four months of FY27, significantly outperforming the 31% achieved in the corresponding period last year. Capital spending rose 30% year-on-year to ₹4.51 trillion in April-July, while the government has set a capital expenditure target of ₹12.22 trillion for the full financial year. According to Business Standard, total government expenditure rose nearly 13% to ₹17.62 trillion, which included ₹13.11 trillion in revenue expenditure, up nearly 8% year-on-year. The government has maintained its fiscal discipline while significantly increasing capital spending to support economic growth initiatives.
Total receipts grew 19% year-on-year to ₹13.07 trillion in April-July, with revenue receipts at ₹12.68 trillion, also up 19% year-on-year. Net tax collections were ₹8.45 trillion, up nearly 28% year-on-year, while gross tax collections showed robust recovery with 11% growth to ₹12.18 trillion. As per Business Standard, after remaining sluggish in the first three months, gross tax collections showed strong recovery. The Centre's net tax collections were ₹8.45 trillion, up nearly 28% year-on-year, with corporate tax collections rising nearly 21% and customs duty collections jumping 38% after the government raised import duty on gold and silver. Excise duty collections declined 23% year-on-year following cuts in special additional excise duty on petrol and diesel in late March.
Spending on major subsidies shot up 35% to ₹1.54 trillion in April-July, driven by a sharp surge of 46% in fertiliser subsidies. With this, the Centre has met 37% of its expenditure target for major subsidies, up from 30% in the same period a year earlier. According to Business Standard, total government expenditure came to ₹17.6 trillion, compared with ₹15.6 trillion a year earlier, while capital expenditure increased significantly to ₹4.5 trillion against ₹3.5 trillion a year ago. The revenue deficit was at ₹43,645 crore or 7.4% of the fiscal year's budget target. Recent data shows total expenditure surged 12.7% year-on-year to ₹17.6 trillion, while capital spending increased to ₹4.5 trillion from ₹3.5 trillion, reaching 36.9% of the annual target.
During the April-July period, ₹3.72 lakh crore was transferred to state governments as devolution of taxes by the Government of India, which is ₹56,190 crore lower than the previous year. This reduction in devolution reflects the government's focus on maintaining fiscal discipline at the central level while managing the overall fiscal deficit within the budgeted framework. As per Business Standard, ICRA Chief Economist Aditi Nayar noted that four tranches of devolution have been shared with the states in April-July FY27 versus five in April-July FY26, which could normalise the pace of growth closer to gross tax revenues.
