India is preparing for a wider-than-expected ​budget deficit this year, Bloomberg News reported on ‌Friday, citing an official familiar with ​the matter, as the war ⁠in Iran raises fuel subsidy costs and pressures government finances.

Reuters could not immediately verify the report ‌and has sought comment from India’s finance ministry.

The country, the world’s ‌third-largest oil importer and consumer, is willing ‌to ⁠let the budget gap widen ⁠by as much as 50 basis points to 4.8 per cent of GDP compared with the 4.3 per cent target for this ​fiscal year that ‌started on April 1, according to the report.

Higher crude prices and supply disruptions after the closure of the Strait of ‌Hormuz have hit India, prompting state retailers ​to raise petrol and diesel prices by about 8 per cent. The government ⁠has also cut subsidies on cooking gas cylinders for households.

India ships in about 90 per cent ‌of its oil and is one of the countries most-exposed to prolonged Iran war-related disruptions to global energy supplies.

The government’s fertiliser subsidy is likely to jump 20 per cent in the fiscal year, a government ‌official had said earlier.

Authorities are keeping their options ​open for now and plan to reassess the fiscal outlook later this ⁠year, when there is more clarity on non-tax ⁠revenues and subsidy needs, Bloomberg News reported.

The government is also evaluating ‌possible spending cuts across ministries to contain the deficit, the report said.

Published on June 12, 2026