The central government’s capital expenditure surged 66% year-on-year in June to Rs 89,255 crore, data released Friday by the Controller General of Accounts showed. Despite this sharp increase in capex, the Centre’s total spending in June was unchanged from the same month last year, as a 31% decline in interest payments helped lower revenue expenditure by 8%.
The marked rise in investments by the Centre in June means it’s now on track to meet its capex target of Rs 12.22 lakh crore for 2026-27, with 28% of the target met in the first three months of the year. Meanwhile, subsidies also rose sharply, with expenditure for urea subsidy up 68% in April-June as a whole at Rs 53,034 crore.
On the income side, gross tax collections in June were up only 6%, with the excise mop-up down 25% from last year at Rs 21,951 crore, reflecting the duty cuts announced for petrol and diesel in late March. In the first three months of 2026-27, the Centre’s excise duty collections are down 22% at Rs 43,149 crore.
“Weak” growth in Goods and Services Tax collections also weighed on the Centre’s receipts in April, said Aditi Nayar, Chief Economist at rating agency ICRA. “However, customs duty inflows surged by 36%, aided by the duty hikes on gold and silver, elevated global commodity prices, as well as a low base.”
According to Devendra Kumar Pant, Chief Economist at India Ratings & Research, the government’s finances for the first quarter of 2026-27 as a whole suggest the impact of the West Asia war “is not significant”.
“The impact of higher oil prices is not yet fully visible on Union government finances. Had the government not reduced excise duty on petrol and diesel, the tax collections would have been higher,” Pant said.
The Union Budget for 2026-27 estimated Rs 3.89 lakh crore would be collected from excise duty this fiscal. In the first three months of the year, 11% of the target has been collected.
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