NEW DELHI: Centre’s fiscal deficit hovered around 18% of the full year’s estimate at the end of the first quarter, despite elevated capex and a slower growth in tax revenue due to the impact of GST rationalisation.During April-June, the Centre’s tax revenue was 3.7% higher at just over Rs 9 lakh crore, compared with a 4.6% increase in the year-ago period. While net income tax collections rose 6.8% to Rs 3,05,395 crore, corporation tax mop-up went up nearly 20% to Rs 2,06,827 crore, with STT up 45% at Rs 18,856 crore, latest data released by the Controller General of Accounts showed.Higher oil and commodities prices pushed up customs duty by 36% to Rs 57,741 crore during the first quarter, but GST rate cuts and removal of cess took a toll on the overall revenue under the head, despite CGST rising 17% to over Rs 2.7 lakh crore on a net basis.On the expenditure side, capital expenditure went up 23.7% to Rs 3.4 lakh crore, which is seen to be impressive as it came on the back of a 52% jump seen during the first quarter of the last financial year. Revenue expenditure was 7.4% higher at a little under Rs 10.2 lakh crore.There was an increase in capex by the food and public distribution department, railways and even ports. Railway’s capex in the first quarter is estimated to have risen 31% to Rs 97,706 crore, while it was flat in the case of roads, the traditional powerhouse, at Rs 63,978 crore.When it came to revenue expenditure, fertiliser subsidy shot up 61% to nearly Rs 65,000 crore, while fuel subsidy, largely due to LPG, soared from Rs 314 crore during April-June 2025 to Rs 7,861 crore in the first quarter of the current fiscal year. The spike was driven by the war in West Asia, which pushed up global prices and also created shortages, prompting govt and PSUs to scout for the essential items across the globe.“Looking ahead, while global energy prices had cooled by June-end 2026, tensions in West Asia have renewed since mid-July 2026. The duration of the West Asia conflict remains unclear and a prolonging of the crisis could keep global energy prices elevated and volatile, while also disrupting the supply of key inputs for fertiliser production. This may have direct implications for the govt’s fiscal position through several channels,” said Aditi Nayar, chief economist at ratings agency ICRA.
