Central SBI Research projects the central government fiscal deficit will exceed the budget estimate by ₹1.2 lakh crore in 2026-27. This anticipated rise occurs despite higher GST growth, improved disinvestment receipts, and a reduction in capital expenditure.
The report attributes this fiscal gap to structural factors, specifically increased spending on fertiliser, LPG, and petroleum subsidies. It also notes the impact of a revised GDP base year on deficit calculations. The 4.7 per cent deficit projection relies on the 2022-23 base, while the 4.3 per cent estimate used the 2011-12 base. Additionally, the excise cut is expected to incur a loss of ₹1.1 lakh crore.
Data for the first half of the 2026-27 financial year shows total expenditure rose by 10.7 per cent, while tax and non-tax revenue receipts grew by 3.6-3.8 per cent. Consequently, the fiscal deficit in actual rupee terms increased by 25 per cent to ₹7.14 lakh crore. The research team stated the government can finance this wider deficit using cash balances rather than increasing borrowings. These cash balances were estimated at ₹8.5 lakh crore at the end of October 2026 and may reach ₹2.5 lakh crore by March 2027.
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