The projected fiscal deficit of 4.7 per cent uses the 2022-’23 base, while the 4.3 per cent budget estimate was calculated based on the 2011-’12 base.

The report notes that the Excise Duty cut is expected to cause the Centre a revenue loss of Rs 1.1 lakh crore.

Besides, an increase of Rs 90,000 crore in fertiliser subsidy and around Rs 48,000 crore in petroleum and LPG subsidy is set to burden the Centre’s finances.

The expected increase in the fiscal deficit is despite stronger-than-expected GST growth, better disinvestment receipts and a marginal cut in capital expenditure, the report adds.

SBI Research has said that the Centre’s wider fiscal deficit can be financed through government cash balances without increasing borrowings.

The report estimates cash balance (adjusted with core liquidity) at October-end 2026 at Rs 8.5 lakh crore as compared to Rs 2.2 lakh crore a year ago, and it may stand at Rs 2.5 lakh crore by March-end 2027.

In H1 FY27 as compared with H1 FY26, while both tax revenue and non-tax revenue receipts increased by 3.6 to 3.8 per cent, the total expenditure increased by 10.7 per cent.

Consequently, the fiscal deficit (in actual rupee terms) has increased by 25 per cent to Rs 7.14 lakh crore, the report says.