In absolute terms, the fiscal deficit between April and May was ₹1,62,354 crore, against ₹13,163 crore a year ago, according to official data released on Tuesday. The government has pegged the FY27 fiscal deficit at ₹16.96 lakh crore.
In May alone, however, the government recorded a fiscal surplus of ₹2 lakh crore, compared with ₹1.73 lakh crore a year earlier, substantially narrowing the deficit of 21.4% of the full-year target seen in April.
Analysts said the moderation in May will improve the government’s ability to contain its FY27 fiscal deficit at the targeted 4.5% of GDP (4.3% as per the earlier GDP estimate). The May surplus was driven by a record ₹2.86 lakh crore dividend payment by the central bank, surpassing the previous year’s peak of ₹2.69 lakh crore.
Meanwhile, at ₹6.30 lakh crore, the government’s revenue expenditure in the first two months rose by a fifth from a year earlier. It stood at 15.3% of the FY27 target, against 13.3% a year earlier.
Subsidy outgo until May jumped 47% year-on-year to ₹75,542 crore, from ₹51,253 crore. The increase, especially in fertiliser subsidies, was driven by a surge in global prices following the West Asia conflict. Similarly, capital spending during this period rose 13.4% year-on-year to ₹2.51 lakh crore, accounting for 20.5% of the full-year target, compared with 19.7% a year earlier.