Fiscal surplus rises to Rs 2 lakh crore in May, but FY27 remains in deficit

The central government recorded a fiscal surplus of around Rs 2 lakh crore in May, up from about Rs 1.73 lakh crore a year ago, aided by a rise in both tax and non-tax revenues even as spending remained elevated. However, for the first two months of the current financial year, the government's fiscal deficit widened sharply to around Rs 1.62 lakh crore, compared with roughly Rs 13,200 crore in the corresponding period last year.

In other words, while May remained in surplis, the cumulative fiscal position for the first two months of FY27 (financial year to date) remained in deficit, the data showed.

The fiscal deficit for April-May stood at 9.6 per cent of the full-year Budget Estimate of Rs 16.95 lakh crore.

What do fiscal surplus and fiscal deficit mean?

A fiscal surplus means the government's income exceeds its spending during a given period.

A fiscal deficit, on the other hand, means the government spends more than it earns, and needs to borrow to bridge the gap.

Both are normal depending on the timing of revenue collections and expenditure.

The Union Budget for the financial year 2026-27 pegs the fiscal deficit at 4.3 per cent of GDP, down from 4.4 per cent in the year ended March 31.

Governments follow a clear plan to manage their finances. This is known as fiscal consolidation. A more fiscally prudent condition boosts investor confidence, keeps debt under control and prevents sudden budget cuts that could affect growth.

What drove the May fiscal surplus?

The Centre's total receipts in May rose to around Rs 5.06 lakh crore from about Rs 4.53 lakh crore a year ago, aided by tax and non-tax collections, according to official data.

Gross tax revenue increased to around Rs 2.58 lakh crore from Rs 2.43 lakh crore a year earlier.

Non-tax revenue also rose to about Rs 3.26 lakh crore, compared with Rs 2.89 lakh crore in the year-ago month.

Government expenditure increased during the month, though at a slower pace than receipts.

Total expenditure rose to around Rs 3.06 lakh crore from about Rs 2.80 lakh crore in May last year.

Capital expenditure (capex), however, remained largely stable and edged lower to around Rs 61,200 crore from nearly Rs 61,600 crore.

The higher receipts over expenditure resulted in a fiscal surplus of around Rs 2 lakh crore during the month.

Here's what April-May numbers indicate

During April-May, the Centre's total expenditure climbed to around Rs 8.81 lakh crore from about Rs 7.46 lakh crore a year earlier.

At the same time, total receipts slipped marginally to around Rs 7.18 lakh crore from Rs 7.33 lakh crore.

Gross tax revenue rose modestly to about Rs 5.24 lakh crore from Rs 5.15 lakh crore. However, non-tax revenue eased to around Rs 3.51 lakh crore from Rs 3.57 lakh crore during the same period.

With expenditure outpacing receipts, the Centre's fiscal deficit widened to around Rs 1.62 lakh crore during April-May.

The fiscal deficit has already reached 9.6 per cent of the government's full-year FY27 target of about Rs 16.95 lakh crore.