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Informist, Tuesday, Jun. 9, 2026

 

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--Govt source: Don't see need for higher market borrowing in FY27 
--Govt source: See fertiliser subsidy rising 100% in FY27 vs Budget estimate 
--Govt source: Hopeful of exceeding FY27 miscellaneous capital receipt aim 
--Govt source: Have robust pipeline of PSU stake sales in FY27 
--Govt source:Took INR-1.23-tln hit from petrol, diesel excise duty cut March 
--Govt source:Won't bring supplementary demand for grants in Monsoon session 
--Govt source: Capex momentum to continue in FY27 despite fiscal stress 
--Govt source: Will review FY27 Budget numbers from August 
--Govt source: IDBI Bank privatisation to happen for sure 
--Govt source: No plan to compensate oil cos for under-recoveries 
--Govt source: Econ stabilisation fund to help meet FY27 fiscal deficit aim 
--Govt source: See Jan-Mar growth momentum continuing in Apr-Jun 
--Govt source: See strong growth in FY27 on steady domestic conditions 

 

NEW DELHI – The government expects to meet its fiscal deficit target for the current financial year with help from higher-than-Budgeted disinvestment receipts and the economic stabilisation fund, a top official said Tuesday. The government also sees no need for higher market borrowing in FY27, according to the official.

The Union Budget pegged the fiscal deficit for FY27 at 4.3% of GDP. In March, Minister of State for Finance Pankaj Chaudhary had said that the fiscal deficit target for the year was pegged at 4.5% of GDP, based on the downward revision in India's nominal GDP in the new series with FY23 as the base year. To fund its fiscal deficit, the government aims to borrow INR 16.09 trillion from the market in FY27.

 

The government's finances have been under pressure because of the war in West Asia, with some economists expecting the Centre to miss its fiscal deficit target for FY27. In April, the government's fiscal deficit nearly doubled year-on-year to INR 3.62 trillion, accounting for 21.4% of the Budget estimate of INR 16.96 trillion for the current financial year. 

 

The government has already taken a INR-1.23-trillion hit from the petrol and diesel excise duty cut announced in March, the official said. However, there is no plan to compensate oil marketing companies for their under-recoveries right now, the official added. 

Higher fertiliser subsidy is also a key risk to the fiscal deficit target this year. Fertiliser subsidy is seen doubling in FY27 from the Budget estimate of INR 1.71 trillion, the government official said. 

 

Despite the stress on its finances, the government's capital expenditure momentum will continue in FY27, the official said. Instead, the Centre will rely on the revenue from disinvestment in state-owned companies and the economic stabilisation fund to meet the fiscal deficit target, the official added. 

 

The government is hopeful of exceeding the FY27 miscellaneous capital receipt target of INR 800 billion, the official said. The Centre has already collected INR 185.33 billion from disinvestment and asset monetisation so far this year, nearly a fourth of the full-year miscellaneous capital receipts target.

 

The Centre has a "robust pipeline" for disinvestment in FY27 through stake sales in public sector companies, the official said. The government has raised INR 121.66 billion this year from selling stake in Central Bank of India, Coal India Ltd., and NHPC Ltd.

 

The plan to privatise IDBI Bank is also on and the government is committed to ensure the stake sale happens this year, the official said. 

 

Privatisation of IDBI Bank, in which the government aims to sell its 30.48% stake and Life Insurance Corp. of India's 30.24% stake, has hit a snag after the financial bids received were below the reserve price. After the proposed strategic sale, the shareholding of the government and LIC in IDBI Bank will fall to 15% and 19%, respectively.

 

The government will also use the economic stabilisation fund, set up earlier in 2026 with a INR 1 trillion corpus, to help meet the fiscal deficit target in FY27, the official said. In March, Finance Minister Nirmala Sitharaman had said that the economic stabilisation fund was set up to meet expenditure needs arising from uncertain geopolitical conditions.

 

Amid the geopolitical conflict and the resultant fiscal stress, the government is likely to review the FY27 Budget numbers from August, the official said. The Centre is also unlikely to bring a supplementary demand for grants in the Monsoon Session of Parliament, the official siad. 

GROWTH MOMENTUM

The growth momentum in economic activity seen in the March quarter is continuing in the June quarter as well, the official said. India's GDP grew higher than expected in the March quarter at 7.8%, refecting that economic activity remained resilient despite headwinds from the West Asia war, which is now in its fourth month. 

 

Growth is expected to remain strong this year because of steady domestic conditions even as geopolitical headwinds continue. The Reserve Bank of India Friday lowered its GDP growth projection for FY27 to 6.6% from 6.9%, citing risks from the West Asia war and higher energy prices.  End

 

US$1 = INR 95.35

 

Reported by Priyasmita Dutta

Written by Shubham Rana

Edited by Avishek Dutta

 

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