Capital expenditure by 54 large central public sector enterprises and five departmental arms, having a capex minimum target of Rs 100 crore, rose 93 per cent year-on-year (YoY) in the April-May period to Rs 1.39 trillion. The National Highways Authority of India (NHAI) and the Railways have started this financial year’s capex cycle on a stronger note.
In the first two months of FY24, the 54 CPSEs, along with the departmental arms, achieved 19 per cent of their combined budget target of Rs 7.33 trillion, Business Standard has learnt. The central government had increased the capex target by 13.4 per cent in FY24 over the revised target of Rs 6.46 trillion in FY23.
During FY23, these CPSEs and departmental arms were able to achieve 100.5 per cent of their full-year revised target of Rs 6.46 trillion.
In the two months of FY24, the NHAI spent around Rs 29,920 crore against its annual capital expenditure target of Rs 1.62 trillion; Indian Oil Corporation (IOCL) achieved 18.2 per cent of its capex target of Rs 30,395 crore on the back of the resumption of work on its pipeline projects and boosting its refining capacity.
The Railway Board, excluding Dedicated Freight Corridor Corporation of India (DFCCIL) and Kolkata Metro Rail Corporation (KMRCL), achieved 23.4 per cent of the capex target of Rs 2.44 trillion.
A senior finance ministry official said the focus of the government on capex has pushed these CPSEs to accelerate their expenditure at the beginning of the financial year. Generally, at the beginning of the financial year, these companies plan their capital expenditure and hence, there is usually a slow start to the cycle in the first quarter.
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He further said the capex targets are taken seriously by these CPSEs as that help the government undertake their performance evaluation and decide on performance-related pay.
India’s largest crude oil and natural gas producer, ONGC, the two months of FY24 spent around Rs 4,880 crore against the annual capex target of Rs 30,125 crore. NTPC managed to achieve 8.6 per cent of its annual target of Rs 22,454 crore.
Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) spent around Rs 1,460 crore (14.3 per cent) and Rs 850 crore (8.5 per cent), respectively, as capex.
Fuel retailers/refinery companies -- IOCL, BPCL, and HPCL -- 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 announced an increase of 33 per cent in the capex outlay to Rs 10 trillion to “crowd in” private investment, enhance growth potential, and provide a cushion against global headwinds; it is 3.3 per cent of gross domestic product. The target included Rs 1.3 trillion interest-free loans to states for 50 years.
In the first month of FY24, the Centre was able to spend only 7.8 per cent of its full-year capex target of Rs 10 trillion, against 10.5 per cent in the corresponding period last year, according to the latest data available from the Controller General of Accounts.