India’s Fiscal Deficit Report

NEW DELHI (Reuters) – India’s fiscal deficit for the first quarter of the financial year starting in April was 1.36 trillion rupees ($16.25 billion), or 8.1% of the estimate for the year, according to government data released on Wednesday.

Key Figures

• Net tax receipts (April-June): 5.5 trillion rupees (21% of the annual target), up from 4.34 trillion rupees last year.
• Total government expenditure: 9.7 trillion rupees (20.4% of the annual goal), down from 10.51 trillion rupees last year.
• Capital expenditure: 1.81 trillion rupees (16.3% of the annual target), compared to 2.78 trillion rupees last year.

Government spending was subdued during this period due to general elections.

Fiscal Deficit Target Adjusted

Last week, the Indian government lowered its fiscal deficit target to 4.9% of GDP from 5.1%, supported by surplus transfers from the central bank and stronger tax revenues.

Despite this adjustment, there was a higher allocation in the federal budget for job creation and areas governed by key allies in Prime Minister Narendra Modi’s coalition government.

Future Fiscal Policy

The budget gap was 5.6% of GDP in the last fiscal year. Starting in financial year 2026, India will shift from setting fiscal deficit targets to using the government debt-to-GDP ratio as the primary guideline for fiscal policy.

($1 = 83.6810 Indian rupees)