Overview
- India’s official accounts showed the central government kept its FY26 fiscal deficit at the budgeted 4.4% of GDP, with a Rs 15.19 lakh crore gap reported in data released by the Controller General of Accounts on Monday.
- The FY26 result relied heavily on a record Reserve Bank of India surplus transfer of Rs 2.87 lakh crore and roughly Rs 60,000 crore of government expenditure cuts to contain the headline deficit.
- The start of FY27 was weaker when April’s accounts recorded a Rs 3.62 trillion deficit equal to 21.4% of the FY27 target because revenue receipts fell sharply and spending rose, signalling risk to the government’s 4.3% FY27 goal.
- Pakistan’s provisional numbers show a much narrower FY26 deficit of about 3.6% of GDP driven in part by a Rs 2.4 trillion profit transfer from the State Bank of Pakistan and tight expenditure control under an IMF programme.
- Policymakers face several clear risks that could push deficits higher: large but volatile one-off transfers do not repeat, recent excise cuts on fuel trimmed revenue by an estimated Rs 14,000 crore, and rising subsidy and front‑loaded capital spending could increase borrowing needs and market pressure.