India’s fiscal deficit widens to ₹3.1 lakh crore in Q1 despite higher tax collections as capex picks up

India’s fiscal deficit widened to ₹3.1 lakh crore during the April-June quarter of FY27, up from about ₹2.8 lakh crore in the corresponding period last year, according to data released by the Controller General of Accounts (CGA) on Friday (July 31).The fiscal deficit, or the gap between the government’s expenditure and revenue, stood at ₹3,07,833 crore, accounting for 18.2% of the full-year Budget Estimate, compared with 17.9% in the year-ago period.The Centre has budgeted a fiscal deficit of ₹16.96 lakh crore, equivalent to 4.3% of gross domestic product, for FY27.Also read: The ₹84,084 crore plan to reduce India’s dependence on imported oilGovernment finances in the first quarter were supported by higher tax collections. Net tax revenue stood at ₹6.36 lakh crore, or 22.2% of the Budget Estimate for FY27, compared with 19% of the annual target in the corresponding period last year. In absolute terms, net tax receipts increased from around ₹5.4 lakh crore in April-June FY26 to ₹6.4 lakh crore in the first quarter of FY27.Non-tax revenue also increased to ₹3.8 lakh crore from ₹3.7 lakh crore a year earlier. These receipts include dividends from public sector enterprises and the Reserve Bank of India, spectrum-related income and government fees.Capital expenditure rises to ₹3.4 lakh croreThe Centre’s total expenditure during the first three months of FY27 stood at ₹13.57 lakh crore, or 25.4% of the full-year Budget Estimate, compared with 24.1% in the corresponding period last year. In absolute terms, expenditure rose from about ₹12.2 lakh crore to ₹13.6 lakh crore.Also read: No rate hike needed now, says Pronab Sen as economists urge RBI to watch growth risksCapital expenditure increased to ₹3.4 lakh crore during the quarter from ₹2.75 lakh crore a year earlier, reflecting higher spending on infrastructure and other asset-creating projects.The increase in capital outlay is in line with the government’s strategy of supporting economic growth through public investment while maintaining its fiscal consolidation path. Finance Minister Nirmala Sitharaman has set the fiscal deficit target for FY27 at 4.3% of gross domestic product.

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