The National Highways Authority of India, which invests about Rs 1 lakh crore annually, depends more on loans than the Budget support.
The Centre’s budgetary constraints have started reflecting on public sector enterprises and departmental undertakings (CPSEs) since FY19 as reduced outlays, and the decline has been sharper in FY20. Budget support to these entities, conventionally little over a quarter of their investible resources, declined 5% on year in FY19 and a sharper 15% in FY20 (see chart).
However, the CPSEs have shown capex growth outpacing the Centre’s Budget capital spending in both FY19 and FY20, as they relied more on internal resources (post-tax profits) and borrowings. Prodding by the growth-hungry government is also behind the continued stress on capex by CPSEs. While budgetary capex for FY20, as per the latest Budget, is slated to be Rs 3.49 lakh crore, up 3% from the Budget estimate made in July last year, CPSEs among themselves will expend Rs 5.1 lakh crore as capex in the year, up 14% from the initial estimate.
CPSE’s’ internal and extra-budgetary resources or IEBR (two-thirds of which are debt) are estimated to rise by 17% in FY20. Even though IEBR is projected to decline 5% in FY21, it could be revised upward as has been done for FY20. In FY20, IEBR component has been revised upward by around 30% from the original estimate.
After rising more than three times in five years to reach Rs 2.26 lakh crore in FY19, budget assistance to CPSEs is estimated to fall to Rs 2.15 lakh crore in FY20 and dip further to Rs 1.82 lakh crore in FY21. IEBR rose a little less than three times in five years to Rs 6.08 lakh crore. It is now estimated to be Rs 7.1 lakh crore in FY20 and Rs 6.73 lakh crore in FY21.
The capital expenditure in railways has increased over the years but has taken a quantum jump since FY16, when both the Budget support and EBR became nearly at par. Of capital expenditure of Rs 1,33,378 crore in FY19, about 60% was from EBR or loans. The EBR component is estimated to be over 53% in FY20 and 52% in FY21.
The National Highways Authority of India, which invests about Rs 1 lakh crore annually, depends more on loans than the Budget support. The Budget share in NHAI’s annual investment is estimated to come down to 33% in FY20 from 37% in FY19. It is estimated to increase to 39% in FY21.