Steady trend: PSUs hit 34% of capex target in April-August, shows data

Public sector undertakings (PSUs) that have a capital expenditure (capex) target of over Rs 100 crore and above saw their combined capital spending touch over 34 per cent of the annual target of Rs 6.62 trillion as on August 31. Central PSUs spent Rs 2.3 trillion during April-August 2022. 

In the April-July period, PSUs spent Rs 1.84 trillion in capex, which accounted for 28 per cent of the aggregate target for the current financial year. This stood against the Rs 1.34-trillion capex in April-July 2021 or 22 per cent of last year’s target of Rs 5.95 trillion. 

In FY22, PSUs 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.

Although the spending by public sector enterprises is broadly in line with last year’s trend, PSUs have been told to expedite their capex program, an official said. PSUs have a target to achieve 90 per cent of their capex goals by December 31.

The performance of PSUs on capital spending was reviewed by the Prime Minister’s Office earlier this month.

The Centre, through government departments and PSUs, has been lifting the economy through capital spending as investments from private sector lag. 

The Centre had announced a record Rs 7.5-trillion capex target in the Union Budget for 2022-23, to support the economy recovering from the pandemic-induced slowdown. The centre has spent Rs 2.1 trillion in capex till July 2022. This is 28 per cent of the Budget target as compared to 23 per cent of Rs 5.5-trillion target achieved in July 2021.

The capex spending data for August would be released on Friday.

Earlier this month, Finance Minister Nirmala Sitharaman drew parallel with the mythological character Hanuman and urged the industry to step up its investments. “Is it like Hanuman? You don’t believe in your own capacity, in your own strength and there’s got to be someone standing next to you and say you are Hanuman, do it?,” she had said.

However, there are signs that private sector capex is on the cusp of revival on the back of

healthy profitability, deleveraged balance sheets, strong domestic demand, and a well-capitalised banking system.