Capital expenditure by CPSEs touches 76% of Rs 6.6-trillion target

The capital expenditure (capex) by large central public sector enterprises (CPSEs) with a target of Rs 100 crore or more touched 76 per cent of the annual budgeted target of Rs 6.62 trillion during the first 10 months of the fiscal year (2022-23, or FY23), revealed sources.

The capex target covers 54 CPSEs and five departmental arms.

By comparison, CPSEs could exhaust only 72.56 per cent of the Rs 5.95-trillion target during the same period in the previous fiscal year (2021-22, or FY22). The capex of these CPSEs is over and above the Centre’s capex.

While CPSEs spent Rs 2.8 trillion in capex in the first half of FY23, they had invested Rs 2.19 trillion during the comparable period of FY22, registering a growth of 17 per cent.

“CPSEs are taking the capex targets seriously. It is one of the parameters in the memorandum of understanding signed by CPSEs, helping the government undertake their performance evaluation and decide upon performance-related pay,” informed a source.

“With the Revised Estimates (RE) of 54 CPSEs declining to Rs 2.41 trillion, from Rs 2.91 trillion, CPSEs are on track to achieve their target for FY23,” he added.

Petroleum CPSEs and the National Highways Authority of India (NHAI) have so far driven the capex among CPSEs.

In the Budget Estimates for 2023-24, the CPSEs under the Ministry of Petroleum and Natural Gas saw their capex rise 63 per cent to Rs 1.37 trillion, from Rs 84,000 crore (RE). NHAI’s capex was raised 13 per cent from RE to Rs 1.62 trillion.

Fuel retailers/refinery companies, such as Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, saw their capex target raised 67 per cent, from Rs 30,293 crore collectively.

The increase in petroleum capex would enable the retrofitting of refineries to meet emission standards and partly augment strategic reserves. The capex spending of these public sector undertakings is being reviewed by the Prime Minister’s Office regularly.

The Centre has been focusing on a capex-led recovery for the economy through the exchequer as investments from the private sector lag behind.

In the Union Budget 2023-24, Finance Minister Nirmala Sitharaman announced an increase of 33 per cent in the capex outlay to Rs 10 trillion to ‘crowd in’ private investment, enhance growth potential, and provide a cushion against global headwinds, which is 3.3 per cent of gross domestic product. The target included Rs 1.3 trillion interest-free loans to states for 50 years.

So far during the April-December period of FY23, the Centre has been able to spend only 65.4 per cent of its full-year capex target of Rs 7.5 trillion, against 70.7 per cent in the corresponding period last year, according to the latest available data from the Controller General of Accounts.

“Capex of the corporate sector plays a significant role in steering the overall investment climate. An assessment of private investment outlook is vital to gauge the prospects of growth,” noted a paper by the Reserve Bank of India.