India’s fiscal deficit widened sharply to INR 1.6 trillion in April-May 2026-27, up from INR 0.1 trillion a year earlier, reaching 9.6% of the full-year target compared to 0.8% in the same period last year. As a net energy importer, the country is grappling with rising fuel subsidy costs due to elevated oil prices linked to the ongoing Middle East conflict. Total expenditure surged 18.1% year-on-year to INR 8.8 trillion (16.5% of the target), with capital spending, primarily on infrastructure, at INR 2.5 trillion (20.5% of the annual plan). Meanwhile, total receipts declined by 2% to INR 7.2 trillion (19.7% of the annual goal), including net tax revenues of INR 3.5 trillion. India has set its fiscal deficit target for 2026-27 at 4.3% of GDP, or