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According to data released by Controller of General Accounts (CGA), the Centre received over ₹7.32 lakh crore, which is 21 per cent of the Budget Estimate | Photo Credit: PRIYANSHU SINGH
Capital expenditure during the first two months of the current fiscal surged over 54 per cent. However, this did not affect the fiscal deficit much as the Centre recorded a fiscal deficit of just over ₹13,000 crore with support from RBI surplus.
According to data released by Controller of General Accounts (CGA), the Centre received over ₹7.32 lakh crore, which is 21 per cent of the Budget Estimate (BE). This comprised over ₹3.5 lakh crore of net tax collection and over ₹3.56 lakh crore of non-tax revenues. This means tax revenues rose 10 per cent, while non-tax revenues surged 41.8 per cent on a y-o-y basis. Over ₹1.63 lakh crore was transferred to State governments as Devolution of Share of Taxes by Government of India in this period, which is over ₹23,720 crore higher than the previous year.
During this period, the government spent over ₹7.46 lakh crore, which is around 15 per cent of the BE. The expenditure comprised over ₹5.24 lakh crore on revenue account and over ₹2.21 lakh crore of capital expenditure. According to Aditi Nayar, Chief Economist of ICRA, although capital expenditure surged 54 per cent in April-May 2025, this was on a low base, and the extent of growth was somewhat lower at 32 per cent, compared to the levels seen in April-May 2023. Nevertheless, capex amounted to a healthy 20 per cent of the FY26 BE, and even if the same contracts by 1 per cent in the remaining 10 months of FY26, it still meets the target.
“Given the buffers on the receipts side, ICRA believes that the GoI could push up capex by ₹0.8 lakh crore in FY26 relative to the BE, boosting the headline figure to nearly ₹12 lakh crore (versus FY26 BE of ₹11.2 lakh crore), and take the y-o-y growth in the same to a healthy 14.2 per cent,” she said.
Devendra Kumar Pant, Chief Economist at India Ratings & Research (Ind-Ra), said both domestic and global economic landscape has changed since the beginning of FY26. The economy is facing both tailwinds as well as headwinds. It is too early to draw any conclusion on achievability of FY26 fiscal deficit targets. “The slower tax collection growth is a concern, both non-tax collection and non-debt creating capital receipts have remined buoyant and may compensate for slippage in FY26 tax collection,” he said.
Published on June 30, 2025
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