New Delhi, July 23
Centre’s capital expenditure rose to 20 per cent of the budget estimate in April-May FY26, compared to 13 per cent in the same period last year, according to a report on Wednesday.
The Union Budget 2025-26 had allocated Rs 11.21 lakh crore for capital expenditure, which is 3.1 per cent of the GDP.
With the increase in government capex, the manufacturing sector seems to be on a firm growth trajectory, as India’s Manufacturing Purchasing Managers’ Index (PMI) rose to 58.4 in June, marking a fourteen-month high, said credit rating agency CareEdge Ratings in its report.
The Services PMI at 60.4 is at its highest level in the last 10 months. Industrial production, however, grew only 1.9 per cent during April-May in FY26 as against 5.7 per cent in the same period last year. Contraction in both electricity and mining sectors weighed on the overall IIP growth.
Meanwhile, tax generation also grew, as GST collections and E-way bills generation rose by 11.8 per cent and 20.5 per cent in Q1 FY26.
In FY26, GDP growth is projected at 6.4 per cent and current account deficit at 0.9 per cent, the rating agency said in its forecast. CPI inflation eased to 2.1 per cent in June, well below the Reserve Bank of India’s 4 per cent medium-term target, amid lower food inflation and a favourable base.