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Centre's fiscal deficit widens to 42% of FY27 target in H1 due to tax slowdown and high expenditure
Centre's fiscal deficit widened to 42% of FY27 target in H1 due to tax slowdown and high expenditure.
Key points
- Centre's fiscal deficit reached 42% of FY27 target in H1FY27.
- Revenue receipts rose 6% year-on-year to ₹18.35 trillion in April-September.
- Aditi Nayar warned meeting the 4.3% GDP deficit target may be challenging.
Why it matters. Economists caution that the shortfall in excise and income tax collections may cause the government to miss its FY27 budget estimates unless offset by higher customs duty revenue.
The Controller General of Accounts released data on Friday showing the Centre's fiscal deficit widened to 42% of the FY27 target in H1 due to tax slowdown and high expenditure. Revenue receipts rose 6% year-on-year to ₹18.35 trillion, while expenditure climbed 11% to ₹25.50 trillion, driven by a 10% surge in subsidy spending. Icra Chief Economist Aditi Nayar warned that meeting the 4.3% GDP deficit target for FY27 may prove challenging given the steep asking rates for the second half.
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Centre's fiscal deficit widens to 42% of FY27 target in H1 due to tax slowdown and high expenditure
The Centre's fiscal deficit widened to 42% of the FY27 target in the first half of the year, a significant increase from nearly 37% in the corresponding period last year. The Controller General of Accounts (CGA) data reveals the deficit rose nearly 25% year-on-year to Rs 7.14 trillion. Slowing tax collections and a robust pace of expenditure are the primary drivers behind this widening gap. These figures have raised concerns regarding the government's ability to meet the full FY27 budget estimates. The data highlights the challenges in balancing revenue and expenditure in the current fiscal environment.