CPSEs achieve 37% of FY22 capex target in H1, may miss stiff Dec goal

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October 26, 2021 6:00 AM

Their capex was 30% of the annual target in the corresponding period of FY21. Fixed investment, on which the government bets, rose by a sharp 55.3% in Q1FY22 to raise its share in GDP by over 7 percentage points to 31.6%.

Power producer NTPC — which is building 1,980 MW thermal plant in North Karanpura, 1,600 MW Telangana power project, 300 MW Nokhra solar power plant and 300 MW Shimbhoo Ka Burj solar project — invested about `12,000 crore or 50% of its annual capex target in April-September 2021.Power producer NTPC — which is building 1,980 MW thermal plant in North Karanpura, 1,600 MW Telangana power project, 300 MW Nokhra solar power plant and 300 MW Shimbhoo Ka Burj solar project — invested about Rs 12,000 crore or 50% of its annual capex target in April-September 2021.

Large central public-sector entities — companies and undertakings — achieved 37% of their aggregate capital expenditure target for FY22 in the first six months of the current financial year, by spending `2.19 lakh crore, according to official sources. However, these entities are likely to fall behind the finance ministry’s directive to achieve 90% of the FY22 target by December.

Their capex was 30% of the annual target in the corresponding period of FY21. Fixed investment, on which the government bets, rose by a sharp 55.3% in Q1FY22 to raise its share in GDP by over 7 percentage points to 31.6%.
Front-loading of capital expenditure by the Centre, states and CPSEs contributed to the jump.

Given budget constraints, the finance ministry and the Prime Minister’s Office are constantly monitoring the capex of the central public sector enterprises (CPSEs) and other government agencies to promote investment-led economic growth.

The combined capital expenditures by 40-odd large CPSEs and departmental undertakings — all with annual capex budgets of above Rs 500 crore — are projected to be about Rs 5.95 lakh crore in FY22, an increase of 30% on year.
In April-September of the current financial year, the National Highways Authority of India (NHAI) was the highest investor among state-run agencies with capex of Rs 64,000 crore or 52% of the full-year target of Rs 1.22 lakh crore.

NHAI is currently developing several expressways including Delhi-Mumbai, Delhi-Katra, Bengaluru-Chennai and Delhi-Dehradun.

In the first six months of FY22, the railways was the second-largest investor by deploying capex of about `63,000 crore or 32% of its annual target of Rs 1.95 lakh crore. Railways’ investment is largely in the laying of new lines, doubling of tracks, augmenting traffic facilities and construction of rail over bridges/road under bridges.

Power producer NTPC — which is building 1,980 MW thermal plant in North Karanpura, 1,600 MW Telangana power project, 300 MW Nokhra solar power plant and 300 MW Shimbhoo Ka Burj solar project — invested about Rs 12,000 crore or 50% of its annual capex target in April-September 2021.

Fuel retailer-cum-refiner Indian Oil Corporation invested about Rs 12,000 crore (41% of full-year target). It is expanding the capacity of Barauni refinery from 6 million tonne per annum (MTPA) to 9 MTPA, Panipat refinery from 15 MTPA to 25 MTPA and Gujarat refinery from 13.7 MTPA to 18 MTPA.

During the period, upstream oil CPSE, ONGC reported capex of about Rs 11,000 crore or about 37% of its FY22 capex target of Rs 29,800 crore. The oil explorer’s capex deployment was mainly in KG 98/2 Cluster II, Mumbai High South Redevelopment Phase IV, Life Extension of well platforms and Heera Redevelopment Phase-III Project.

Among others, retailer HPCL invested Rs 6,300 crore or 43% of its FY22 capex target of Rs 14,500 crore in the first six months of the current financial year.

Dedicated Freight Corridor Corporation, which is targeting to complete western and eastern dedicated freight corridors by June 2022, has invested just 23% of its FY22 annual capex target of Rs 19,500 crore in April-September, 2021.

In the last few years, capex by CPSEs and other agencies has remained robust. Capex by these entities was Rs 4.6 lakh crore or 92% of the annual target for FY21; this was 4.3% higher than the capital spending by these entities in FY20.
Public sector capex — by union government, state governments and state-run entities — plays an important role in gross fixed capital formation in the country to support economic growth.

Data gathered by FE of 20 major states showed that these states reported combined capex of Rs 1.21 lakh crore in

April-August of FY22, up 70% on year compared with a decline of 35% on year in the corresponding period of FY21. These states’ capex in April-August in the current fiscal year was 10% higher compared with the same in the corresponding period of the pre-pandemic year, FY20.

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