Capex boost of Rs 98,000 cr by big PSUs to spur economy: FM Sitharaman

Economic growth rate fell to over six-year low of 4.5% in the second quarter of 2019-20

The finance ministry on Friday said 32 Maharatna and Navratna public sector units (PSUs) have undertaken a capital expenditure of Rs 98,000 crore till November in the current financial year. 

These PSUs are likely to pump in Rs 60,000 crore during the remaining part of the year in a bid to boost the economy.

The total capex of Rs 1.58 trillion by these PSUs, shown in a presentation given by chief economic advisor Krishnamurthy Subramanian at a press conference called by finance minister Nirmala Sitharaman, was higher by Rs 3,000 crore than the numbers promised by the finance ministry in September. 

Besides, the railways and the ministry of road transport and highways are projected to undertake a capex of Rs 2.46 trillion by the end of the month, Subramanian said. 

This way, 66 per cent of the budgeted capex of Rs 3.38 trillion has already been undertaken, he said. 

Economic growth rate fell to over six-year low of 4.5 per cent in the second quarter of 2019-20. 

The latest figures show that the economy is still not out of the woods. 

Index of industrial production (IIP) contracted 3.8 per cent in October, the third straight month of decline. Retail price inflation rate rose to a 40-month high of 5.54 per cent in November.

Later, on the sidelines, Subramanian said there is no stagflation in the economy and the rise in inflation is transient. 

The government has announced packages for sectors such as housing, exports, non-banking financial companies and auto, besides coming out with general expenditure to boost measures. 

To a query, Sitharaman said no other sector came to the government for help. She said the government will hold pre-budget consultations with various sector representatives from Monday. 

Ahead of the crucial meeting of the GST Council next week, Sitharaman said the buzz of an increase in GST rates is everywhere other than her office. She, however, did not rule out a hike in GST rates, saying her ministry is yet to apply its mind to it. 

In his presentation, Subramanian also said public sector banks have disbursed Rs 2.2 trillion to corporates, Rs 72,985 crore to micro, small and medium enterprises (MSMEs) and Rs 39,453 crore to retail borrowers. 

He said more than 62 per cent of dues of 32 PSUs have been cleared in the last two months and now only Rs 4,877 crore remained to be paid. 

To give a boost to the MSME sector, their bills worth Rs 12,698 crore were discounted till November 15, Subramanian added. 

Amid debate on the worsening job scenario in the country, he said casual workers in the economy declined by five percentage points to 25 per cent in 2017-18 compared to 30 per cent in 2011-12.

However, regular salaried workers rose by five percentage points to 23 per cent during this period. 

He said drop in casual labour was driven by rural workers where there was a shift from the category to salaried jobs and self employment. 

Revenue secretary A B Pandey talked of the government initiative on the faceless assessment of cases under direct taxes and said questionnaires have been sent to assessees in 19,883 cases under this.