Centre’s Capex Surges 40% in H1 While Fiscal Deficit Widens to 36% of Budget Estimates
About the Report
The Controller General of Accounts (CGA) reported that India’s central government capital expenditure (capex) surged nearly 40% during April–September FY26. This robust rise, led by ministries such as Road Transport, Railways, and Defence, underscores the government’s continued infrastructure-led growth push.
However, muted tax growth during the same period widened the fiscal deficit to 36% of the Budget Estimates (BE), compared with 29% in the first half of FY25, indicating a tighter fiscal space going forward.
Key Figures & Sectoral Breakdown
| Head | 2024–25 Amount (₹ Cr) |
2025–26 Amount (₹ Cr) |
% Change (FY26 vs FY25) |
|---|---|---|---|
| Roads | 1,40,560 | 1,71,089 | +21.7% |
| Railways | 1,35,698 | 1,43,348 | +5.6% |
| Defence | 53,883 | 92,211 | +70.8% |
| Telecom | 5,182 | 17,876 | +245% |
| Housing | 12,677 | 14,030 | +8.8% |
Overall capital expenditure touched ₹5.8 lakh crore — 52% of the BE of ₹11.21 lakh crore for FY26. This marks significant progress, particularly in infrastructure-linked sectors that continue to drive employment and GDP momentum.
Traders monitoring Index Momentum Update or Option Writing View can align with PSU and infra stock trends linked to fiscal expansion.
Revenue and Fiscal Deficit Details
The Centre’s revenue receipts stood at ₹17.3 lakh crore, representing 49.5% of the BE till September 2025. However, net tax revenue growth remained subdued, with only 2.8% expansion during the same period. Income tax collections rose 4.7%, while corporate taxes grew 1.1% year-on-year.
Indirect taxes increased by 3.2%, but customs duties contracted 5.2%. The Centre transferred ₹6.31 lakh crore to states, higher by ₹86,948 crore than last year.
Experts at ICRA noted that despite strong spending, muted tax buoyancy could make the 4.4% fiscal deficit target of GDP challenging to maintain by FY26-end.
SWOT Analysis
Valuation & Investment View
- Short-term: Positive sentiment in infrastructure and PSU segments due to higher government outlays.
- Medium-term: Possible consolidation if fiscal deficit pressures trigger bond yield tightening.
- Long-term: Structural growth in infra capex and Make-in-India projects could sustain double-digit growth in capital goods and cement sectors.
Investor Takeaway
Indian-Share-Tips.com’s analysis indicates that India’s fiscal structure continues to prioritize infrastructure spending, which supports employment and industrial output. While muted tax collections create near-term concerns, the long-term investment multiplier remains intact. Investors can consider capital goods, PSU, and infra-linked equities for accumulation during dips.
Discover more fiscal insights and investment updates at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Fiscal and Capex Trends
- How Does Rising Capex Impact GDP Growth and Fiscal Deficit?
- Which Sectors Benefit Most from Government Spending in FY26?
- Will Fiscal Slippage Affect Bond Yields and Market Liquidity?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
