Capex by CPSEs accelerates to 53% of annual target during Apr-Oct period- QHN

The Capital expenditure (capex) by large Central Public Sector Enterprises (CPSEs) with a target of over Rs 100 crore during the first seven months of the financial year (April-October) touched 53.03 per cent of the annual target of 6.62 trillion, according to official sources.

During the same period a year ago, CPSEs were able to exhaust only 44.78 per cent of the full year target.

The railways and National Highway Authority of India (NHAI) are driving the capital expenditure among the CPSEs for the centre. NHAI achieved 71.6 per cent of its annual capital expenditure target of Rs 1.34 trillion. Railway Board excluding Dedicated Freight Corridor Corporation of India Limited (DFCCIL) and Kolkata Metro Rail Corporation Ltd. (KMRCL) has been able to achieve 47.23 per cent against the capex target of Rs 2.32 trillion. DFCCIL and KMRCL have been able to achieve 36.7 and 31.2 per cent respectively of their annual capex target till end-October.

A government official on condition of anonymity said the CPSEs are on a good track to achieve the target and NHAI will easily exceed the capex target before the end of the financial year. “The CPSEs are taking the capex targets seriously by these CPSEs that help the government to undertake their performance evaluation and decide upon performance-related pay,” the official said.

The capex report of these CPSEs after the end of every month is sent for review to the Prime Minister’s Office (PMO). In FY22, CPSEs had spent capex to the tune of Rs 5.5 trillion or achieved 96 per cent of their annual target of Rs 5.75 trillion.

The largest crude oil and natural gas producer company ONGC has been able to achieve 48 per cent against its budgeted annual capex target of Rs 29,950 crore.

Fuel refining and marketing company IOCL (Indian Oil Corporation Ltd.) achieved 68 per cent of its annual target of Rs 28,549 crore on the back of the resumption of work on its pipeline projects after the pandemic. On the other hand, HPCL (Hindustan Petroleum Company Ltd.) has been able to achieve 66 per cent of its annual target.

In the union budget 2022-23, Finance minister Nirmala Sitharaman announced an increase of 35.4 per cent in the capital expenditure outlay to Rs 7.50 lakh crore, including a Rs 1 lakh crore interest-free loan to states. So far for the first half of FY23, the centre has been able to spend only 45.7 per cent of its full year capex target, according to latest data available from the Controller General of Accounts.

Chief Economic Advisor V Anantha Nageswaran earlier this month said the government should focus on completing ongoing capex projects in the public sector rather than starting new ones.

Public investment in infrastructure is expected to crowd in private investment.

“The capex of the corporate sector plays a significant role in steering the overall investment climate. An assessment of the private investment outlook is vital to gauge the prospects of growth,” noted an RBI paper.