Capex by large state-run firms jump 121% to Rs 53,000 crore in April

Expenditure cycle of NHAI, petroleum CPSEs off to a strong start

Capital expenditure (capex) by large central public sector enterprises (CPSEs) with a target of Rs 100 crore or more has grown by 121 per cent year-on-year (YoY) to Rs 53,000 crore in April as the National Highway Authority of India (NHAI) and petroleum CPSEs started the capex cycle on a stronger note.

In April, CPSEs, along with departmental arms, achieved 7.3 per cent of the budgeted target of Rs 7.33 trillion for FY24, Business Standard has learnt. The central government has increased the capex target by 13.4 per cent in FY24 over the revised target of Rs 6.5 trillion in FY23.

The capex target covers 54 CPSEs and five departmental arms. The departmental arms include NHAI and Railways.

During FY23, CPSEs were able to achieve 100.4 per cent of their full-year revised target of Rs 6.46 trillion.

A government official said April could be an exception since at the beginning of the fiscal year, the CPSEs plan their capital expenditure and, hence, there is usually a slow start to the cycle in the first quarter.

He added that the number of CPSEs had remained the same for this fiscal year as well, because certain enterprises whose capex target went below Rs 100 crore were replaced by other CPSEs that saw their target enhanced in FY24.

The NHAI has invested around 5 per cent of its annual capital expenditure target of Rs 1.62 trillion, while Indian Oil Corporation (IOCL) achieved 7.4 per cent of its annual target of Rs 30,395 crore on the back of the resumption of work on its pipeline projects and enhancing its refining capacity.

The largest crude oil and natural gas producer, ONGC, has been able to achieve around 8.5 per cent against its budgeted annual capex target of Rs 30,125 crore. NTPC has managed to achieve 3.3 per cent of its annual target of Rs 22,454 crore.

Fuel retailers or refinery companies, such as Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, saw their capex target raised 67 per cent, from Rs 30,293 crore in FY23 to Rs 50,605 crore in FY24 collectively.

The increase in petroleum capex would enable the retrofitting of refineries to meet emission standards and partly augment strategic reserves. 

The capex report of these CPSEs after the end of every month is sent for review to the Prime Minister’s Office (PMO).

The Centre has been focusing on a capex-led recovery for the economy through the exchequer as investments from the private sector lag.

In the Union Budget 2023-24, Finance Minister Nirmala Sitharaman jhad announced an increase of 33 per cent in the capex outlay to Rs 10 trillion to ‘crowd in’ private investments, enhance growth potential, and provide a cushion against global headwinds, which is 3.3 per cent of gross domestic product. The target included Rs 1.3 trillion interest-free loans to states for 50 years.

During the April-February period of FY23, the Centre has been able to spend only 81.1 per cent of its full-year revised capex target of Rs 7.3 trillion, against 80.6 per cent in the corresponding period last year according to latest data available from the Controller General of Accounts.