India fiscal deficit widened to ₹7.14 lakh crore in the first half of fiscal 2026–27, reaching 42.1% of the full-year target as capital spending and major subsidy outlays increased. The gap was ₹5.73 lakh crore, or 36.5% of that year’s target, in the same period a year earlier.

Key Takeaways

  • Total expenditure rose 10.7% year over year in April–September, while major subsidy spending increased 10.1%.
  • Capital expenditure reached ₹6.55 lakh crore, or 53.6% of its full-year budget estimate.
  • The government’s fiscal deficit target for FY27 is ₹16.96 lakh crore, equivalent to 4.3% of GDP.

India fiscal deficit and the annual target

The figures released on October 30, 2026, cover the first six months of India’s fiscal year, which runs from April through March. In September alone, the government recorded a deficit of ₹4,164 crore, compared with a surplus of ₹25,030 crore in September 2025.

The Controller General of Accounts’ note on monthly figures cautions that deficits during the year do not necessarily indicate the full-year outcome, because receipts and expenditure can arrive at different times.

Capital spending and subsidies rise

Capital expenditure reached ₹6.55 lakh crore against a full-year budget estimate of ₹12.22 lakh crore. That was 53.6% of the annual estimate, compared with 51.8% at the same point a year earlier.

Major subsidy spending rose to ₹2.23 lakh crore from ₹2.02 lakh crore in April–September a year earlier. Food subsidy expenditure increased 16%, while petroleum subsidy spending fell almost 83%.

Receipts and expenditure

Total expenditure reached ₹25.49 lakh crore, or 47.7% of the full-year budget estimate. Total receipts were ₹18.35 lakh crore, equivalent to 50.3% of the estimate, the finance ministry said.

Receipts included ₹12.76 lakh crore in net tax revenue, ₹4.8 lakh crore in non-tax revenue and ₹78,602 crore in non-debt capital receipts. The government transferred ₹6.99 lakh crore to states as their share of taxes, ₹67,658 crore more than in the corresponding period a year earlier.

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