India's Fiscal Deficit at 9.6% of FY27 Target by End-May

India's fiscal deficit stood at 9.6% of the full-year target for 2026-27 (FY27) at the end of May 2026. The fiscal deficit is the gap between the government's total expenditure and its revenue, and it is met through borrowing.

In absolute terms, the deficit was about 1.62 trillion rupees. A month earlier, at the end of April, it had touched 21.4% of the budget estimate, so the figure narrowed sharply in May. The main reason for this improvement was a record dividend of about 2.87 trillion rupees paid by the Reserve Bank of India to the government, according to data from the Controller General of Accounts (CGA).

Even though the deficit narrowed month-on-month, it was much wider than the same period a year earlier. In April-May of FY27 the deficit was 1.6 trillion rupees, compared with just 0.1 trillion rupees in the year-ago period. Experts, however, cautioned against reading too much into the first two months of data, since dividends, direct tax collections and GST settlements are spread unevenly through the year.

The government has budgeted a fiscal deficit of 4.3% of GDP, or about 16.96 trillion rupees, for FY27. Weaker receipts partly reflect the Centre's March decision to cut excise duty on petrol and diesel by 10 rupees per litre each, which costs nearly 14,000 crore rupees in revenue every month.

For exams, this covers key fiscal concepts, the role of the CGA, the RBI dividend as non-tax revenue, and the difference between budget estimates and actuals.