FY22 target: Large CPSEs keep capex pace despite second wave

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August 18, 2021 2:15 AM

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.

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

Large central public sector entities — companies and undertakings — achieved 23% of their aggregate capital expenditure target for FY22 in the first four months of the current financial year, by spending Rs 1.34 lakh crore, according to official sources.

Given the second Covid wave that disrupted an incipient economic revival in the initial months of FY22, this is a decent number; these entities have achieved much lower of the annual capex target in the year-ago period when a nation-wide lock-down brought economic activities to a standstill.

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 agencies as the Centre is banking on investment-led economic growth revival. The finance ministry has recently asked the CPSEs and other agencies to accelerate the pace to achieve 90% of the FY22 capex target by the third quarter itself.

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 6 lakh crore in FY22, an increase of 30% on year.

In April-July of the current financial year, the National Highways Authority of India (NHAI) has emerged as the highest investor with Rs 41,000 crore or 34% of the full-year target of Rs 1.22 lakh crore. In fact, by building national highways at a record 37km/day, the NHAI had surpassed Indian Railways for the first time in FY21 on the capex front by investing Rs 1.25 lakh crore. The NHAI is currently developing several expressways, including Delhi-Mumbai, Delhi-Katra, Bengaluru-Chennai and Delhi-Dehradun.

In the first four months of FY22, the railways was the second largest investor by deploying capex of about Rs 40,000 crore or 19% of its annual target of Rs 2.15 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.

During the period, upstream oil CPSE ONGC reported a capex of about Rs 7,500 crore or about 25% 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.

Fuel retailer-cum-refiner Indian Oil Corporation invested Rs 7,500 crore (26% 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.

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 Rs 7,800 crore or 33% of its annual capex target in April-July 2021.

Among others, retailer-cum-refiner BPCL invested Rs 2,700 crore of its FY22 capex target of Rs 10,000 crore in the first four 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 13% of its FY22 annual capex target of Rs 19,500 crore in April-July 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.

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