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

Capital expenditure (capex) by large central public sector enterprises (CPSEs) with a target of Rs 100 crore or more touched 53.03 per cent of the annual target of Rs 6.62 trillion during the first seven months of the financial year, according to 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 Highways Authority of India (NHAI) are driving the capital expenditure among CPSEs for the Centre. 

NHAI achieved 71.6 per cent of its annual capital expenditure target of Rs 1.34 trillion.

The Railway Board, excluding Dedicated Freight Corridor Corporation of India (DFCCIL) and Kolkata Metro Rail Corporation (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 said the CPSEs are on track to achieve the target and NHAI will easily exceed the capex target. 

“The CPSEs are taking the capex targets seriously. These help the government 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 a capex of Rs 5.5 trillion or achieved 96 per cent of their annual target of Rs 5.75 trillion. ONGC has been able to achieve 48 per cent against its budgeted annual capex target of Rs 29,950 crore.

Indian Oil Corporation (IOC) achieved 68 per cent of its annual target of Rs 28,549 crore on the back of work resumption on its pipeline projects after the pandemic.

On the other hand, Hindustan Petroleum Corporation (HPCL) has been able to achieve 66 per cent of its annual target.

In Budget 2022-23, Finance Minister Nirmala Sitharaman announced an increase of 35.4 per cent in the capital expenditure outlay to Rs 7.5 trillion, including a Rs 1 trillion interest-free loan to states.

So far for the first half, 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.

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

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