The ministries of Road Transport & Highways and Railways have exceeded the national average capital expenditure (capex) by spending 63 per cent and 57 per cent of Budget estimates (BE), respectively, in the first half of 2025-26 (FY26).
The total capital expenditure for April-September of FY26 stood at 52 per cent of the BE, according to the latest data by the Controller General of Accounts (CGA).
The increased capex spending includes Rs 50,000 crore disbursed to the department of food and public distribution against a budget allocation of Rs 20 crore for FY26.
Without this amount, the increase in total capital expenditure of the government stood at 47.3 per cent of the BE for the first half of FY26.
An analysis of ministries spending with a minimum allocation of Rs 3,000 crore under capex showed that among those lagging in this expenditure included the Petroleum and Natural Gas ministry and the department of economic affairs — with only 2 per cent of capex utilised in H1.
The department of science and technology had not utilised any of its capex allocation of Rs 20,096 crore, CGA data showed.
Overall capital expenditure for April-September of FY26 increased by 40 per cent compared to the corresponding period in the previous year, reaching Rs 5.8 trillion.
This outpaced the budgeted growth of 6.6 per cent.
“The government has been doing the heavy lifting on capex but now it would show caution since there would be pressure on revenue due to the shortfall in GST collections.
"However, with consumer sentiment now improving, we will see more private sector investment picking up,” said Madan Sabnavis, chief economist, Bank of Baroda.
He added that while the overall target of capex would be achieved there may not be scope to exceed it.
Experts pointed out that the increase in capital spending has been accompanied by a sharp contraction in revenue spending.
An analysis by Motiwal Oswal noted that the revenue spending stood at Rs 17.2 trillion in April-September FY26 or 44 per cent of FY26BE, the lowest in at least a decade.
“We believe the fiscal deficit remains manageable despite higher defence spending.
"We see a possibility of 10 basis points (bps) of slippage risk due to trailing revenue receipts. But the positive in fiscal math is that revenue expenditure is yet to pick up,” the Motilal Oswal report said.
A report by Nomura said that capex needs to contract by 15 per cent in the second half to prevent a slip in the target.
Economists, however, feel that the government will be able to keep to the target since capex is a discretionary spending, and therefore, also meet the fiscal deficit number of 4.4 per cent.
Finance Minister Nirmala Sitharaman had said on Tuesday that the government is confident of meeting the 4.4 per cent fiscal deficit target in FY26 before moving its focus to the debt-to-GDP ratio from next financial year onwards.
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