Not just the government, its companies and undertakings also have sustained their robust capex pace in the first quarter of 2017-18. The central public sector enterprises (CPSEs) and departmental undertakings (DUs) with annual capex plans of Rs 500 crore and above have invested Rs 57,500 crore in April-June this year — though this was only 18% of the annual target, in no year has Q1 capex by these entities been anywhere close to this year’s. Riding on defence projects, the Centre’s budgetary capex grew a whopping 58% to Rs 52,536 crore in April-May this year.
It is unclear whether the spending by the Centre via budget and its firms has helped arrest the decline in gross fixed capital formation (GFCF) witnessed in the fourth quarter of the last fiscal, as private investments have hardly recovered. Nevertheless, the data from the specified CPSEs and DUs signal that public spending, which was the principal growth driver in 2016-17, retained that role into the current financial year.
These entities had reported a record annual capex increase in 2016-17 with investments of Rs 2.54 lakh crore. In the first half of the last financial year, their investments from own resources and borrowings were, however, just around Rs 60,000 crore. Their capex target for the current year was set at a comparatively lower Rs 2.36 lakh crore, but going by the Q1 figure, that did not result in any slowing of the investments. In addition, these entities will get Rs 69,600 crore this year as budgetary capex support.
For the first time in the new GDP series, GFCF contracted in Q4FY17 — it was 2.1% less than in the year-ago quarter.
Among the government entities, the National Highways Authority of India (NHAI) was the largest investor in Q1FY18, followed by Power Grid Corporation (PGCIL), Indian Oil and ONGC (see chart). The NHAI, which aims to construct 3,500 km of highways this year, invested about Rs 20,000 crore, or 35% of the total investments by these entities in the first quarter.
PGCIL, which is aggressively participating in railway electrification projects and other transmission works, came in second with a Rs 6,333-crore investment in April-June of 2017. NTPC, which has about 24GW of capacity under construction, invested Rs 5,070 crore, or 18% of its annual target of Rs 28,000 crore, in Q1 of 2017-18. Of the 40 government undertakings which reported capex of Rs 500 crore and above, eight including Bharat Sanchar Nigam Nigam (29%) and Steel Authority of India (29%) achieved more than 20% of their annual investment targets in Q1 this year. BSNL, which is a key player in the government’s scheme of expanding digital infrastructure in rural areas, has plans to invest Rs 4,300 crore in 2017-18.
The issue of stalled projects is proving to be sticky. In the June quarter of this year, these were above 12% of under implementation projects, much the same as the level in FY17. According to CMIE, private sector has announced projects worth Rs 84,300 crore in Q1FY18, lowest since June 2015.