Capex rises 54% in Apr-May FY26, RBI dividend lifts revenue: CGA data

Government capex rose 54 per cent in April-May FY26 as RBI dividend boosted non-tax revenue and kept the fiscal deficit at a 28-year low for the two-month period

The government’s capital expenditure (capex) witnessed an increase of 54 per cent in the April-May period of 2025-26 (FY26) compared to last year when capex was subdued due to elections, according to the latest data released by the Controller General of Accounts (CGA) on Monday. Revenue-wise too, the government has seen a growth of 10 per cent in tax and 41.8 per cent in non-tax revenues due to Reserve Bank of India (RBI) dividends on a year-on-year (Y-o-Y) basis, the CGA data showed.

 

“Given the buffers on the receipts side, Icra believes that the government could push up capex by ₹0.8 trillion in FY26, relative to the Budget Estimate (BE) of ₹11.2 trillion, boosting the headline figure to nearly ₹12 trillion, taking the Y-o-Y growth in the same to a healthy 14.2 per cent,” said Aditi Nayar, chief economist, Icra.

 

The higher-than-budgeted dividend from the RBI pulled down the fiscal deficit to ₹131.6 billion, or 0.8 per cent of the FY2026 BE for the April-May period. Experts said that the cumulative fiscal deficit in the first two months of FY26 was the lowest since the government's monthly fiscal numbers were made available — April 1997. 

 

 

“This situation will progressively change in the subsequent months of the financial year, and the surplus will be eventually converted to a deficit. In fact, other major fiscal aggregates show a performance which is quite different from the corresponding annual performance of FY25,” said DK Srivastava, chief policy advisor, EY India.

 

The total revenue receipts for the first two months of FY26 was ₹707,739 crore at 20.7 per cent of the BE, compared to 18.2 per cent in the corresponding period last year. Within revenue receipts, non-tax revenue in April-May was 61.1 per cent of the BE against 46.1 per cent last year. Personal income tax, which grew at 17 per cent in April-May FY25, has registered a growth of 6.4 per cent during the same period of FY26. Union excise duties, which contracted by -1.7 per cent in FY25, grew 8.6 per cent during the first two months of FY26. 

 

Non-debt capital receipts for the same period stood at over ₹25,000 crore, which was 33.2 per cent of the BE compared to 2.7 per cent in the corresponding period last year.

 

“Tax revenue is growing slower than the budgeted growth. Non-tax revenue and non-debt capital receipt more than compensated for slower tax revenue growth,” said Devendra Pant, chief economist, India Ratings.