Economic slowdown: Central PSUs vow to meet 2019-20 capex target

By: |
Updated: Sep 29, 2019 6:49 AM

The Centre’s budget capex is estimated to rise about 10% year-on-year to Rs 3.38 lakh crore in FY20 compared with Rs 3.03 lakh crore in FY19.

Till August-end, IOC has spent 32% of its capex target of Rs 25,083 crore, while NTPC’s capex was on target at 42% of Rs 20,000 crore planned for the whole year.

To bolster much-needed public capital spending, finance minister Nirmala Sitharaman on Saturday met the heads of 32 central public sector enterprises (CPSEs) and asked them to speed up their capex and release pending dues to industry and contractors by October 15. The minister also asked Maharatna firms such as ONGC, NTPC and IOC to provide their detailed capital expenditure plans for the next four quarters for faster execution of projects.

Of their FY20 capex plan of Rs 1.53 lakh crore, these 32 CPSEs have spent only Rs 48,077 crore in April-August. ONGC’s capex till August-end was Rs 8,777 crore, or 27% of the total planned capex of Rs 32,921 crore for FY20. Till August-end, IOC has spent 32% of its capex target of Rs 25,083 crore, while NTPC’s capex was on target at 42% of Rs 20,000 crore planned for the whole year.

The CPSEs, which participated in the meeting, have plans of making additional capital expenditure of Rs 50,000 crore in the December-quarter.

Besides asking the CPSEs to clear pending dues held up due to lack of authentication of bills or regular delays in processing of bills, Sitharaman asked for review of post-arbitration counter-claims filed by CPSEs.

About Rs 49,000 crore claims filed by industry against the 32 CPSEs are under various stages of arbitration, while the CPSEs have also filed counter arbitration for about Rs 43,000 crore, expenditure secretary Girish Chandra Murmu said.

While a drive will be launched by the CPSEs to authenticate bills and release pending dues to goods and service providers by mid-October, the minister was surprised to find that most of the CPSEs are also procuring outside of the Government e-Marketplace (GEM) portal. “A bit of shocker to me… Nearly Rs 60,000 crore of purchases have been made by most of CPSEs for goods and services, which are available through GEM portal, outside of the GEM,” she said, adding that officials would look into the reasons.

Public procurement (including CPSEs) as a percentage of GDP in the country is estimated to be 20-22%. For a size of Indian economy at $2.7 trillion, this amounts to public procurement to the tune of $500 billion annually.

The minister’s vigorous push to capex clearly signals the government’s thinking that apart from giving a cash booster to companies with steep tax cuts, the government sector will also have to play a timely and complementary role in advancing the much-awaited revival of the investment cycle. The combined capital expenditure by 244 CPSEs and departmental undertakings such as the NHAI and the Indian Railways are projected to be Rs 4.5 lakh crore in FY20 as compared with Rs 4.36 lakh crore in FY19. They contribute in substantial measure to fixed assets creation in the economy.

Under prodding by the government, many large CPSEs have accelerated their capital spending in recent years and they have also had to pay liberal dividends and buy back own shares to support a revenue-hungry government.

The Centre’s budget capex is estimated to rise about 10% year-on-year to Rs 3.38 lakh crore in FY20 compared with Rs 3.03 lakh crore in FY19.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Export hubs urge migrant workers not to leave
2Salaried jobs lost: 10 million & counting
3Commerce Ministry to meet exporters on April 20 to discuss export scenario