Fiscal deficit at Rs 5.73 lakh crore, capex a spotlight in H1FY26

Six months into monetary 12 months 2025-26 (FY26), the Centre’s books stay properly balanced with a pointy give attention to capital expenditure, which is now slightly above 50% of the Budgeted Rs 11.1 lakh crore. However tax revenues stay decrease than the latest pattern with issues that it could undershoot the full-year goal.

The Centre’s fiscal deficit stood at Rs 5.73 lakh crore or 36.5% of the Finances estimate between April and September 2025, knowledge launched by the Controller Normal of Accounts on Friday revealed. The Centre’s fiscal deficit was decrease at 29.4% of the BE within the first half of FY25, largely on account of decrease spending.

Between April and September 2025, the Centre’s capex rose to Rs 5.8 lakh crore or 51.8% of the complete 12 months goal with frontloading of expenditure in key infra sectors of railways and roads. On a sequential foundation, capital expenditure elevated by 34.5% from Rs 4.31 lakh crore between April and August this fiscal. In all, the Centre spent Rs 1.49 lakh crore as capex in September, which was the second highest since April this fiscal.

Complete expenditure remained on monitor and the Centre spent Rs 23.03 lakh crore within the first six months of the fiscal, which is 45.5% of the BE of Rs 50.65 lakh crore.

The income deficit nonetheless shrank to Rs 27,147 crore or 5.2% of the BE between April and September 2025 from Rs 1.98 lakh crore with a slower tempo of income expenditure that amounted to Rs 1.72 lakh crore or 43.7% of the BE within the first half of the fiscal.

Complete receipts amounted to Rs 17.3 lakh crore or 49.5% of the BE within the first six months of the fiscal 12 months. Nonetheless, web tax income got here in decrease at Rs 12.29 lakh crore or 43.3% of the BE.

Aditi Nayar, Chief Economist, ICRA stated, “With an asking development price of over 21% in H2 FY2026 to satisfy the FY2026 BE, we’re apprehensive that taxes will undershoot the budgeted goal.”

Gross tax income rose by a muted 2.8% 12 months -on-year in the course of the first half of FY2026, with a 4.7% rise in revenue tax collections, and a subdued 1.1% development in company tax collections. The rise in oblique tax collections was tepid at 3.2% in H1 FY2026, with a 5.2% contraction in customs duties and a 4-8% development in GST and excise responsibility collections, she identified. 

The minimize in GST charges may additionally result in an additional discount in collections though the federal government is assured that larger gross sales would compensate for the decrease income.