Capital spending reached 53.6% of its annual target by September, but fell for a second consecutive month as subsidy costs rose and the fiscal deficit reached 42.1% of its full-year goal.
India’s capital spending rose in the first half of the current fiscal year, but the pace slowed in September and the Centre’s deficit widened as subsidy costs climbed, according to official accounts released by the Controller General of Accounts and reported by The Hindu BusinessLine.
The provisional numbers show capital expenditure at ₹6,54,547 crore in April-September, equal to 53.6 per cent of the full-year Budget Estimate. That is up from roughly ₹5.8 lakh crore in the same period a year earlier, indicating continued public investment even as monthly momentum weakened towards the end of the half-year.
September was the second month in a row to show a year-on-year decline in capital spending. Aditi Nayar, chief economist at ICRA, told The Hindu BusinessLine that capex fell 3 per cent in September after a sharper contraction in August. She added that growth had slowed to 2.8 per cent in the July-September quarter from 23.7 per cent in the first quarter, warning that this could weigh on gross domestic product growth. On her estimate, capex rose 12.7 per cent in the first half, leaving a demanding second-half target.
The same accounts show that the fiscal deficit reached ₹7,14,413 crore by the end of September, or 42.1 per cent of the full-year target of ₹16.96 lakh crore, compared with 36.5 per cent at the same point last year. The widening gap reflects higher expenditure, especially on subsidies. Urea subsidy spending alone stood at ₹85,586 crore, or 73 per cent of the annual allocation, while nutrient-based fertiliser support reached ₹33,664 crore, or nearly 62 per cent of the Budget Estimate.
Net tax revenue stood at ₹12.76 lakh crore, or 44.5 per cent of the annual estimate, slightly above the 43.3 per cent seen a year earlier. Still, ICRA’s Nayar said elevated global energy prices could keep fertiliser and fuel subsidies under pressure and leave receipts short of expectations, potentially leading to a modest fiscal slippage of about ₹1.3 lakh crore to ₹1.4 lakh crore against the FY27 target. She also said the overrun might not automatically mean heavier market borrowing, because small savings inflows have been running ahead of plan.
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