The Government of India’s (GoI) fiscal deficit expectedly widened to Rs. 7.1 trillion in 5M FY2027 (41.9% of FY2027 Budget Estimate; BE) from Rs. 6.0 trillion in 5M FY2026 (39.4% of FY2026 Provisional Actuals; PA), led by a higher revenue deficit, as well as a strong 18% capex expansion. The sharp rise in the GoI’s fiscal deficit in August 2026 was led by the release of an extra tranche of devolution to the states in the month, as opposed to the release of a double tranche in July in 2025.

• GTR grew by modest 6.5% YoY in 5M FY2027: This was pulled down by the sharp 23% contraction in excise duty collections, owing to the duty cuts on petrol and diesel, even as most other taxes, including CGST (+15.4%) and customs duty (+28.2%) posted a double-digit growth during this period.
• Growth in capex outpaced that in revex in 5M: On the expenditure side, the GoI’s capex declined by ~30% YoY in August 2026, after surging by ~60% in June-July 2026.