Latest news with #FY2026
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Business Standard
12 hours ago
- Business
- Business Standard
Govt has scope to increase capital expenditure this fiscal, says ICRA
The government has the scope to increase total expenditure by ₹0.8 trillion, given the fiscal buffers and the upward revision in the FY2025 nominal GDP number, which bodes well for the deficit and debt-to-GDP targets for FY2026, a report by ICRA said on Tuesday. 'If this entire amount (₹0.8 trillion) goes for additional capex, it would push up the headline figure to nearly ₹12.0 trillion and take its growth to a healthy 14.2 per cent from 6.6 per cent currently.' Capital expenditure for April 2025 surged by 61 per cent year-on-year to ₹1.6 trillion, according to the latest data by the Controller General of Accounts. This was 14.3 per cent of the FY2026 Budget Estimate (BE), as against 9.4 per cent of FY2025 provisional estimates. ICRA said that this was well above the average monthly required rate of ₹0.9 trillion for the fiscal. 'This implies that capex needs to grow by a mere 0.9 per cent in the remaining 11 months of the fiscal to meet the FY2026 BE of ₹11.2 trillion,' it added. The report noted that the additional cushion on the receipts side—on account of the higher-than-budgeted RBI dividend transfer—provides comfort on the fiscal front amidst heightened global uncertainties. The dividend pay-out, ICRA said, could provide room to push capex above the target of ₹11.2 trillion in FY2026. 'The fiscal deficit-to-GDP ratio can be contained at 4.4 per cent in FY2026, while also accommodating a marginal fiscal slippage to the tune of ₹300–350 billion, given the larger base,' the ICRA report said. The CGA data also showed miscellaneous capital receipts for April 2025 amounting to ₹214.1 billion, which is 46 per cent of the FY2026 budget estimate of ₹470 billion. 'This gives us confidence that the target for the fiscal is unlikely to be missed. This provides some relief, given that a shortfall in miscellaneous capital receipts has been a recurring phenomenon,' the report said. The government's revenue receipts increased by 21 per cent to ₹2.6 trillion (7.5 per cent of FY2026 BE) in April 2025 from ₹2.1 trillion in the corresponding month last year. 'Compression in revenue deficit and healthy non-debt capital inflows contained the fiscal deficit at ₹1.9 trillion in April 2025, despite the surge in capex,' ICRA said. With the capex overshooting the FY2025 Revised Estimate (RE), the embedded growth in the same for FY2026 is now pegged at 6.6 per cent, lower than the 10 per cent seen in the Budget.
India Gazette
17 hours ago
- Business
- India Gazette
Govt will have extra Rs 0.8 trn for capex in FY26 because of higher dividend by RBI, robust GDP: ICRA
New Delhi [India], June 3 (ANI): The central government has extra space in the fiscal deficit to push up expenditure by at least Rs. 0.8 trillion in FY2026 relative to the Budget Estimates (BE), as the higher GDP and RBI dividend payout provide room for it, according to a report by ICRA. The report highlighted various positive factors in the economy and added that the government could raise expenditure by Rs. 0.8 trillion in FY2026. If the full amount is used for capex, the total capex would rise to Rs. 12.0 trillion from the budgeted Rs. 11.2 trillion, raising its growth to 14.2 per cent, compared to 6.6 per cent currently. ICRA said, 'FY2025 fiscal deficit contained at 4.8 per cent of GDP; higher GDP, RBI dividend pay -out provides space for Rs. 0.8 trillion extra capex in FY2026.' The report noted that the Government of India's fiscal deficit stood at Rs. 15.8 trillion in FY2025, which was slightly higher than the Revised Estimate (RE) of Rs. 15.7 trillion. This increase of Rs. 0.1 trillion was mainly due to higher-than-budgeted capital expenditure (capex) of Rs. 0.3 trillion and lower non-debt capital receipts of Rs. 0.2 trillion. However, this was partly balanced by a lower-than-expected revenue deficit of Rs. 0.4 trillion. Despite this, the fiscal deficit was contained at 4.8 per cent of GDP, in line with the target for the year, thanks to a higher nominal GDP in the provisional estimates (PE) compared to the earlier forecast (FAE). The report mentioned the positive outlook because in April 2025, the fiscal deficit was Rs. 1.9 trillion, about 12 per cent of the FY2026 BE, compared to Rs. 2.1 trillion in April 2024, which was 13 per cent of the FY2025 PE. The decline came as a result of a drop in the revenue deficit to Rs. 0.5 trillion and a sharp increase in non-debt capital receipts. This helped absorb the 61 per cent year-on-year increase in capital spending during the month. ICRA said the upward revision in the FY2025 GDP number supports the achievement of fiscal deficit and debt-to-GDP targets for FY2026. Even though nominal GDP growth is expected to be lower at 9.0 per cent in FY2026 compared to the budgeted 10.1%, the fiscal deficit can still be held at 4.4 per cent of GDP. This also gives the government space for a small slippage of Rs. 300-350 billion. The government also benefits from higher receipts, including Rs. 2.7 trillion as RBI dividend, which gives a cushion of Rs. 0.4 trillion. There is also more room to raise excise duties on petrol and diesel, especially after the Rs. 2/litre increase in April 2025, due to softening global oil prices. Additionally, as per data from the Controller General of Accounts (CGA), miscellaneous capital receipts in April 2025 have already reached about 46 per cent of the FY2026 BE of Rs. 470 billion. So, as per ICRA, given these buffers, the GoI could push up expenditure by at least Rs. 0.8 trillion in FY2026 relative to the BE. (ANI)
Time of India
18 hours ago
- Business
- Time of India
Govt will have extra Rs 0.8 tn for capex in FY26 because of higher dividend by RBI, robust GDP: ICRA
The central government has extra space in the fiscal deficit to push up expenditure by at least Rs. 0.8 trillion in FY2026 relative to the Budget Estimates (BE), as the higher GDP and RBI dividend payout provide room for it, according to a report by ICRA . The report highlighted various positive factors in the economy and added that the government could raise expenditure by Rs. 0.8 trillion in FY2026. If the full amount is used for capex, the total capex would rise to Rs. 12.0 trillion from the budgeted Rs. 11.2 trillion, raising its growth to 14.2 per cent, compared to 6.6 per cent currently. ICRA said, "FY2025 fiscal deficit contained at 4.8 per cent of GDP; higher GDP, RBI dividend pay -out provides space for Rs. 0.8 trillion extra capex in FY2026." by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Trading CFD dengan Teknologi dan Kecepatan Lebih Baik IC Markets Mendaftar Undo The report noted that the Government of India's fiscal deficit stood at Rs. 15.8 trillion in FY2025, which was slightly higher than the Revised Estimate (RE) of Rs. 15.7 trillion. This increase of Rs. 0.1 trillion was mainly due to higher-than-budgeted capital expenditure (capex) of Rs. 0.3 trillion and lower non-debt capital receipts of Rs. 0.2 trillion. However, this was partly balanced by a lower-than-expected revenue deficit of Rs. 0.4 trillion. Live Events Despite this, the fiscal deficit was contained at 4.8 per cent of GDP, in line with the target for the year, thanks to a higher nominal GDP in the provisional estimates (PE) compared to the earlier forecast (FAE). The report mentioned the positive outlook because in April 2025, the fiscal deficit was Rs. 1.9 trillion, about 12 per cent of the FY2026 BE, compared to Rs. 2.1 trillion in April 2024, which was 13 per cent of the FY2025 PE. The decline came as a result of a drop in the revenue deficit to Rs. 0.5 trillion and a sharp increase in non-debt capital receipts. This helped absorb the 61 per cent year-on-year increase in capital spending during the month. ICRA said the upward revision in the FY2025 GDP number supports the achievement of fiscal deficit and debt-to-GDP targets for FY2026. Even though nominal GDP growth is expected to be lower at 9.0 per cent in FY2026 compared to the budgeted 10.1%, the fiscal deficit can still be held at 4.4 per cent of GDP. This also gives the government space for a small slippage of Rs. 300-350 billion. The government also benefits from higher receipts, including Rs. 2.7 trillion as RBI dividend, which gives a cushion of Rs. 0.4 trillion. There is also more room to raise excise duties on petrol and diesel, especially after the Rs. 2/litre increase in April 2025, due to softening global oil prices. Additionally, as per data from the Controller General of Accounts (CGA), miscellaneous capital receipts in April 2025 have already reached about 46 per cent of the FY2026 BE of Rs. 470 billion. So, as per ICRA, given these buffers, the GoI could push up expenditure by at least Rs. 0.8 trillion in FY2026 relative to the BE.
Express Tribune
a day ago
- Business
- Express Tribune
Inflation rate jumps tofive-month high of 3.5%
Market analysts caution that IMF-related measures in the upcoming FY2026 budget—particularly new taxes and adjustments in energy prices—may lead to a renewed spike in inflation. PHOTO: FILE Pakistan's annual inflation rate accelerated to 3.5% in Maythe highest level in five monthsdue to a sudden spike in food prices ahead of the budget, breaking the downward spiral that had persisted for a year and a half. The Pakistan Bureau of Statistics (PBS) reported on Monday that the prices of a basket of essential goods and services rose at an average rate of 3.5% last month. This is the highest reading seen in the past five months and was contrary to official expectations. Nonetheless, it remains far below the fiscal year's inflation target of 12%. In its monthly economic outlook report, the Ministry of Finance had projected inflation to remain between 1.5% and 2% in May. The actual rate was more than double that forecast and fell within the ministry's expectations for June, ahead of the federal budget. For June, the ministry has projected that inflation could rise to between 3% and 4%. With the fresh inflation figure, the gap between headline inflation and the State Bank of Pakistan's (SBP) key policy rate has widened to 7.5%. The banking sector continues to benefit from elevated interest rates, at the expense of the rest of the country. Last month, the Monetary Policy Committee cut the policy rate by 100 basis points to 11%, citing a sustained decline in inflation. Despite the high rates, the money supply grew by 4.7% in May. For the upcoming fiscal year, the government has set a 7.5% inflation target, allowing further room for interest rate cuts. Average inflation during the first 11 months (JulyMay) of the current fiscal year slowed to 4.6%, significantly below the annual target of 12%. This lower average inflation rate will form the basis upon which the increase in pensions and salaries of the government employees will be determined. The government is considering an increase of 6% to 10% in wages and pensions, in line with the reduced average inflation. Core inflationexcluding food and energyeased in both urban and rural areas, dropping to 7.3% in cities and 8.8% in rural areas, according to PBS. Average core inflation remains about 3% below the policy rate, providing further space for the SBP to reduce interest rates. However, under International Monetary Fund (IMF) policy, the government switched the benchmark for borrowing costs from core to headline inflation nearly four years ago. Urban inflation rose to 3.5%, driven by rising food costs. In rural areas, prices turned positive again, with inflation recorded at 3.4% in May. PBS compiles inflation data from 35 cities and tracks 356 consumer items. In rural regions, data is collected from 27 centres and includes 244 items. The PBS data showed that food prices resumed their upward trend. Urban food inflation was recorded at 5.3%, and rural food inflation at 2.1%. Chicken prices soared 52% last month, followed by a one-third increase in pulses, a 30% rise in fresh fruits, 26% in butter, 22% in powdered milk, and 21% in sugar. The government failed to honour its promise of keeping sugar prices under check, following last year's decision to allow exports. The rise in sugar prices is also boosting tax revenues, as the government has linked the 18% sales tax on sugar to the fortnightly inflation rate. Meat prices increased by 12%, while fresh milk rose by 10%. Onion prices remained 54% lower compared to a year ago, while tomato prices dropped 32%, wheat 24%, and tea 18%. Non-perishable food items saw a 5.1% increase in inflation last month. Electricity charges were 29% lower year-on-year, while petrol remained 8% cheaper despite increased taxation. Although global crude oil prices have remained largely stable, the depreciation of the rupee led the government to pass on a Rs3.5 per litre impact on petrol and Rs1 per litre on diesel. Global crude prices are not expected to rise significantly, and overall commodity prices are projected to decline by 15% this year.
Express Tribune
a day ago
- Business
- Express Tribune
Pakistan's CPI inflation rises 3.46% in May on annual basis
Market analysts caution that IMF-related measures in the upcoming FY2026 budget—particularly new taxes and adjustments in energy prices—may lead to a renewed spike in inflation. PHOTO: FILE Listen to article Pakistan's consumer price index (CPI) inflation rose 3.46% in May 2025 compared to the same month a year earlier, data from the Pakistan Bureau of Statistics (PBS) showed on Monday. However, on a month-to-month basis, the national CPI declined by 0.17% compared to April 2025. The CPI is based on the 2015–16 base year and combines urban and rural price indices. Urban inflation increased 0.07% in May over April, while rural inflation dropped 0.53%. The average inflation rate for July 2024 to May 2025 stood at 4.61%, compared with the corresponding period in 2023–24. The national index declined slightly due to drops in key categories including housing and perishable food items. Urban consumers saw a mild increase driven by price hikes in food staples like eggs (+24.38%) and chicken (+8.63%), while tomato (-20.80%) and onion (-12.05%) prices fell sharply. Rural areas experienced a broader decline due to a significant drop in food prices, including tomatoes (-32.99%), onions (-18.37%), and wheat flour (-10.52%). Nonetheless, rural areas reported price increases in eggs (+19.27%) and fresh fruits (+5.07%). Non-food price changes included higher costs for cotton cloth (+3.20%) and motor vehicles (+1.86%) in urban regions, while electricity charges (-7.03%) and motor fuels (-0.67%) dropped. In rural areas, dental services (+5.97%) and education (+1.59%) were among the most notable increases. On a year-over-year basis, urban inflation was up 3.51%, and rural inflation increased 3.39%. Food and non-alcoholic beverages rose 3.07% nationally, with non-perishable food prices up 5.01%, while perishable food items dropped 9.21%. Alcoholic beverages and tobacco saw a 7.86% annual increase, and clothing and footwear surged 9.66%. The most significant annual price increases were recorded in clothing, tobacco, and non-perishable food items. Meanwhile, perishable goods like vegetables and fruits experienced year-on-year price declines. The PBS compiles the CPI using data from 35 cities and 27 rural centres, tracking a total of 600 consumer items. The data provides a key indicator of cost-of-living trends that influence monetary policy and economic planning.
