Central public sector enterprises (CPSEs) and other agencies’ capital expenditure fell 11% year over year in the first six months of the current financial year, dragged down by the slower pace of investment by railways and the National Highways Authority of India despite CPSEs’ accelerating capex pace.
The CPSEs and other agencies with annual capex targets of Rs 100 crore and above have set a combined target of investing Rs 7.8 lakh crore for FY25. These agencies invested Rs 3.38 lakh crore in April-September of FY25, compared with Rs 3.79 lakh crore in the year-ago period.
Given the slower pace of public capex, Finance Minister Nirmala Sitharaman recently held review meetings with key ministries having significant budget capex outlays. Railways and NHAI’s investments are largely funded through the budget.
Both entities accounted for 55% of the CPSEs’ capex target for FY25. Sitharaman recently exhorted railway and road ministries to expedite capital expenditure and make up for the shortfalls in H1 targets in the third quarter of the current financial year itself.
In April-September of FY25, Railways Board capex fell by over 19% to Rs 1.16 lakh crore while NHAI investments fell by 9% to Rs 82,034 crore.
The slowdown in public capex—Centre, states and CPSEs- so far in the current financial year has been largely due to the impact of the general election in Q1FY25 when everything came to almost a standstill.
Yet, CPSEs (excluding Railways and NHAI) have accelerated their capex pace and their achievements in H1 this fiscal has exceeded their performance in the year-ago period.
NTPC, which is expanding capacity across many of its pants and foraying into cleaner energy, has nearly doubled investment to Rs 17,410 crore in April-September 2024 from the year ago period.
Petroleum sector undertakings in aggregate are the biggest public sector investors among the CPSEs and they have also made up for the loss of investment in the election months.
Fuel retailer-cum-refiner Indian Oil Corporation achieved a capex of Rs 19,893 crore in the first six months of FY25, up 8% from Rs 18,441 crore in the corresponding period a year ago.
ONGC, the top state-run player in oil and gas exploration, invested Rs 17,397 crore in April-September 2024, up 18% on year.
States’ capital expenditure likely fell by 17% on-year in the first four months of the current financial year, prolonging the moderation across the public sector capex space. The Centre’s capex fell by 19.5% during April-August 2024.