Image used for representative purpose only.
| Photo Credit: REUTERS

The fiscal deficit for the first quarter of the financial year that started in April was ₹1.36 trillion ($16.25 billion), or 8.1% of the estimate for the whole year, government data showed on July 31.

Net tax receipts in April-June were ₹5.5 trillion, or 21% of the annual target, compared with ₹4.34 trillion in the same period last year, according to the data.

Total government expenditure during the period was ₹9.7 trillion, or about 20.4% of the annual goal, lower than the ₹10.51 trillion in the same period last year.

Government spending in the first three months of the current financial year was subdued due to general elections.

For the three months, the government’s capital expenditure or spending on building physical infrastructure was ₹1.81 trillion, or 16.3% of the annual target, against ₹2.78 trillion in the same period a year earlier.

The Indian government last week lowered its fiscal deficit target to 4.9% of GDP for the financial year from 5.1% in the interim budget in February, on the back of a surplus transfer from the central bank and robust tax revenues.

The target was lowered despite higher allocation in the federal budget for job creation and regions run by key allies in Prime Minister Narendra Modi’s recently formed coalition government.

The country’s budget gap stood at 5.6% of GDP last fiscal year.

India will move away from setting fiscal deficit targets after the financial year 2026 and instead will use the government debt-to-GDP ratio as the anchor for fiscal policy.