India's Fiscal Deficit Widens in Q1 Amid Surge in Capex

Rise in capex signals govt's continued push to support economic growth through investment

- Rhik Kundu

India's fiscal deficit nearly doubled in the first quarter of fiscal year 2026 (FY26), compared with the same period of the previous year, driven by a sharp rise in capital expenditure, signaling the government's continued push to support economic growth through public investment.

Data released on Thursday by the Controller General of Accounts showed the fiscal deficit for April-June (Q1 FY26) at ₹2.81 trillion, or 17.9% of the full-year target.

The fiscal deficit stood at ₹1.36 trillion in the same period last year.

The surge comes amid a ramp-up in central government capex, which rose to ₹2.75 trillion in Q1, 24.5% of the annual goal, compared to ₹1.81 trillion a year earlier.

While the fiscal gap widened, the year-on-year comparison is partly skewed due to the 2024 general election, which had slowed spending in the early months of the previous fiscal year.

This year's early outlay suggests a front-loading of investments in infrastructure and public services, even as private sector capex remains uneven.