More central public sector enterprises told to reach 50% of annual capex target by Q2 end

By: |
August 15, 2020 7:00 AM

With a nearly 40% share, CPSEs have in recent years been the main pillar of public capex and have largely kept pace, even as the other two segments — central budget (25%) and states (35%) faltered.

In April-July, these PSUs have achieved only 20% of their FY21 capex target of Rs 1.25 lakh crore.In April-July, these PSUs have achieved only 20% of their FY21 capex target of Rs 1.25 lakh crore.

Continuing to nudge the central public sector enterprises (CPSEs), finance minister Nirmala Sitharaman on Friday asked seven CPSEs to accelerate spending to achieve 50% of their FY21 capex target by the end of September quarter (Q2). In April-July, these PSUs have achieved only 20% of their FY21 capex target of Rs 1.25 lakh crore.

In a video conference with the third batch of CMDs of the CPSEs, Sitharaman asked the secretaries of administrative ministries of road, shipping, housing and urban affairs, defence and telecom to closely monitor the performance of these CPSEs in order to ensure expenditure of 50% of capital outlay by the end Q2 of FY21 and make appropriate plan for it, the finance ministry said.

On their part, the CPSEs flagged constraints being faced by them especially due to covid. On July 7, Sitharaman had reviewed the capex performance of 23 CPSEs in Q1FY21 while her second review meeting was with another seven CPSEs on July 23 (wherein she asked them to achieve 50% of capex target by end Q2FY21).

The government is worried about capital expenditure performance of CPSEs and other state-run entities like NHAI and railways, which have nearly halved from the trend level in the April-June quarter to around 7% of the FY21 target. Going by the progress, achieving 50% will be a tough task given Covid and back-loading of capex expenditure (usually 75% capex is incurred in H2 of a year).

These seven CPSEs achieved Rs 24,933 crore (20% of the FY21 target) in April-July. In FY20, these CPSEs achieved 88.37% of their capex target of Rs 1.3 lakh crore.

Sitharaman said that better performance of CPSEs can help the economy in a big way to recover from the impact of Ccovid. FM will now hold such review meetings on the performance of capex of CPSEs every month, scoring the urgency to revive economic activity. The idea is to soften the blow to the economy from the sharp drop in private investments and slashing of capital expenditures by revenue-starved states.

With a nearly 40% share, CPSEs have in recent years been the main pillar of public capex and have largely kept pace, even as the other two segments — central budget (25%) and states (35%) faltered.

According to official sources, all 250 CPSEs among themselves spent just 7% of their annual target in Q1FY21, compared with the trend of spending 15% of annual target or thereabouts in Q1. The CPSEs, under government prodding, have set a target to invest about Rs 4.5 lakh crore from their internal accruals and borrowings in FY21; the target itself was lower than the estimated Rs 5 lakh crore (revised estimate) for FY20RE.

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