In a bid to give a fillip to investments and growth, the finance ministry on Friday asked the public sector undertakings (PSUs) to achieve their capital expenditure...
In a bid to give a fillip to investments and growth, the finance ministry on Friday asked the public sector undertakings (PSUs) to achieve their capital expenditure targets for the current financial year or be ready to pay higher dividends to the Centre, sources said.
The nudge to the companies to complete projects in a time-bound manner came during a capex review meeting chaired by finance minister Arun Jaitley with the PSU chiefs such as CMDs of NTPC, Indian Oil and Coal India.
The capex of the PSUs is expected to be R3.18 lakh crore, an increase of approximately R80,844 crore over revised estimate of 2014-15. Most PSUs are on track to meet their capex plan for the year.
There are some who are lagging, we expect them to cover up in the remaining of the year,” said one finance ministry official. Almost 50% of the PSUs have spent between 45-50% of their investment targets in April-September of FY16, sources added. The PSUs, which are lagging behind the schedule, have been asked to speed up investments. Sources said the PSUs have also been asked to pay more dividends if they fail their investment targets as the government finances are under stress due to likely shortfall in disinvestment and tax revenues.
While the revenue department expected a shortfall of R50,000 crore in tax revenues, the disinvestment revenue could be about half of the ambitious target of R69,500 crore for the current year. Keen to keep the public expenditure momentum to boost economic growth in the absence of strong pick up in private investment, the government is not in favour of resorting to heavy expenditure cuts this year.
The World Bank on Thursday retained India’s growth projection at 7.5% for FY16, citing an improvement in the public capital expenditure. India has budgeted Plan capital expenditure to be 40% more on year at R1.35 lakh crore in the current fiscal year.