• GTR target likely to be missed in FY2026, particularly on direct tax side, amid weak 5M trends: GTR expanded by just 1% YoY during 5M FY2026, owing to a 2.5% contraction in PIT collections. Besides, the indirect tax growth was lacklustre at just 3.3%. Implicitly, the steep ~19% expansion required in GTR in remaining 7 months to meet the target suggests that some undershooting for direct taxes is imminent, vis-a-vis the FY2026 BE. Besides, the impact of rationalisation of rates on GST revenues, and the pace of devolution to the states in the coming months need to be closely monitored.
• Capex soared by 43% YoY in 5M FY2026, against 7% growth in revex: In 5M FY2026, the ~43% expansion in capex is much higher than the required target of 6.6%, even as growth in revex has trended mildly lower (+7.2% in 5M vs. +9.5% in BE). The 30% growth in capex during July-August 2025 augurs well for economic activity in Q2 FY2026. The upfronting implies that the capex can contract by ~8% in the remaining 7 months of FY2026 and still meet the target

EXHIBIT: Fiscal trends in April-August or 5M FY2025 and 5M FY2026

Source: CGA, Ministry of Finance, GoI; ICRA Research