New Delhi: The Centre maintained a strong pace of capital expenditure in the first quarter of FY27, underscoring its strategy of using public investment to sustain economic growth even as heightened global trade disruptions and geopolitical uncertainties clouded the investment climate.
The government’s capex was ₹3.4 trillion during April-June, accounting for about 28% of the budgeted expenditure of ₹12.22 trillion for the current fiscal, data released by the finance ministry on Wednesday showed. The continued focus on asset creation comes as policymakers rely on infrastructure spending to support economic activity.
The monthly review of government accounts showed that the Centre’s total expenditure stood at ₹13.57 trillion, or 25.4% of the budget estimates for FY27, with capex accounting for roughly a quarter of overall spending.
The infrastructure-led growth strategy has remained at the centre of India’s fiscal policy over the past several years. Economists assert that public investment in roads, railways, ports, urban infrastructure and other productive assets has a larger multiplier effect than revenue spending, helping crowd in private investment while generating employment and demand across sectors.
Besides creating public assets, higher government investment in infrastructure is expected to improve logistics efficiency, reduce transportation costs, enhance industrial competitiveness and stimulate private sector participation.
The government has repeatedly maintained that capex remains a priority even as it pursues fiscal consolidation, arguing that productive public investment is essential to sustain medium-term growth.
The latest fiscal data indicate that this approach has continued in the current financial year despite increased uncertainty in the global economy. International trade has faced renewed disruptions amid geopolitical tensions and shifting supply chains, while political uncertainties in several major economies have weighed on business confidence and investment decisions.
Tax revenue
On the receipts side, the Centre mobilized ₹10.49 trillion during April-June, equivalent to 28.7% of the budgeted amount for the full year. This included tax revenue of ₹6.37 trillion (net to the Centre), non-tax revenue of ₹3.78 trillion and non-debt capital receipts of ₹35,003 crore.
The government transferred ₹2.63 trillion to the states as their share of taxes during Q1, although this was ₹63,605 crore lower than in the corresponding period a year earlier.
Revenue expenditure during the quarter stood at ₹10.17 trillion. Of this, interest payments accounted for ₹3.46 trillion, while major subsidies amounted to ₹1.15 trillion.
The expenditure pattern suggests that the government has sought to balance its statutory commitments, including interest payments and welfare spending, while continuing to allocate substantial resources towards capital formation.
With private investment gradually recovering but global headwinds persisting, the Centre’s decision to maintain a robust pace of capital spending in the opening quarter is expected to support domestic demand and help preserve growth momentum during the current financial year.
