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Informist, Tuesday, Aug 6, 2024

 

--Fin min source: IOC Apr-Jul capex 122.7 bln rupees, 40% of FY25 aim 

--Fin min source: BPCL Apr-Jul capex 38.6 bln rupees, 30% of FY25 aim 

--Fin min source: HPCL Apr-Jul capex 38.2 bln rupees, 31% of FY25 aim 

--Fin min source: ONGC Apr-Jul capex 117.2 bln rupees, 38% of FY25 aim 

--Fin min source: NTPC Apr-Jul capex 97.7 bln rupees, 43% of FY25 aim 

--Fin min source: NHAI Apr-Jul capex 580.7 bln rupees, 35% of FY25 aim 

--Fin min source: Railways' Apr-Jul capex 719.76 bln rupees 

 

By Priyasmita Dutta

 

NEW DELHI – Capital expenditure by large state-owned companies picked up pace in July, with these companies cumulatively spending 2.16 trln rupees, or about 28% of the full year's aim of 7.77 trln rupees, in the first four months of the financial year started April, a senior finance ministry official said today. Though these public sector enterprises made considerable progress in July, the spending in Apr-Jul was lower than the 2.57 trln rupees they spent in the corresponding period last year.

 

The finance ministry tracks capital expenditure of public sector companies that have an annual investment target of over 1 bln rupees. The Union Budget for 2024-25 (Apr-Mar) set a cumulative capital expenditure target of 9.14 trln rupees for all public sector undertakings, up 8.7% on year. Of the total, state-owned companies with over 1 bln rupees of annual capital expenditure target account for 7.77 trln rupees.

 

"After the Budget, many PSUs said they may raise their capex targets, but so far, they have not submitted the revised targets," the official said. Finance Minister Nirmala Sitharaman presented the full Budget for 2024-25 on Jul 23. "Maybe in the next month, we will get a clear update of their revised targets," the official added. 

 

"Apr-Jun capex was significantly slow because of the Model Code of Conduct (due to the General Election). July onwards they (PSUs) seem to be getting back at their usual flow of spending. We are hopeful that in the second half of the year, capex will be more upbeat, and they will meet their targets," the official told Informist.  

 

The Model Code of Conduct came into effect on Mar 16. Central and state governments could not announce new investments, but could only take forward the projects already underway. The Lok Sabha elections were scheduled from Apr 19-Jun 1 and the results were announced on Jun 4.

 

Though capital expenditure was slower this fiscal so far, the trend in sectoral spending was pretty much the same as last year. Spending in the first four months was predominantly led by the railways, followed by the road and oil sectors, the official said. In the previous financial year as well, these three sectors had performed well, especially the road sector, data showed. Even though railways and road sector capex was significant in Apr-Jul, it was much lower than last year's spending during the same period. 

 

Indian Railways and public sector companies under the railway ministry have together spent 719.76 bln rupees in the first four months of the year, as against the 966.77 bln rupees they had spent in the year-ago period. The railways alone is budgeted to incur 2.65 trln rupees of capital expenditure in 2024-25, up 2% from the revised estimate of 2.60 trln rupees for the previous year. Of the total capital expenditure of 2.65 trln rupees by the railways, 2.52 trln rupees is provided from the Budget.

 

The National Highways Authority of India spent 580.67 bln rupees in Apr-Jul, accounting for 35% of its annual target, the official said. This is lower than the 630.88 bln rupees it had spent in the corresponding period last year. For the full year, NHAI is set to spend 1.68 trln rupees as capital expenditure, up marginally by 0.6%.

 

"The road sector requires multiple layers of approvals from central ministries and state governments. Now that elections and state assemblies are settled, we are hopeful road sector capital spending will significantly improve," the official said. 

 

On the other hand, the official said public sector oil companies have ramped up their capital expenditure and will likely overshoot their targets for the full year. "Oil PSUs are currently spending hefty money on shifting to cleaner energy options, and that is a major part of their capex spending," the official said. 

 

Among oil PSUs, Indian Oil Corp Ltd spent 122.67 bln rupees in Apr-Jul, or 40% of the full-year's target of 309.09 bln rupees. In the first four months of the current financial year, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd spent 38.24 bln rupees and 38.61 bln rupees, or 31% and 30% of their annual targets, respectively. HPCL has earmarked 125 bln rupees for capital expenditure in 2024-25, while BPCL is set to spend 130 bln rupees. 

 

Oil and Natural Gas Corp Ltd's capital expenditure for Apr-Jul was 117.17 bln rupees, accounting for 38% of the annual target of 308 bln rupees, the official said.

 

Power major NTPC Ltd spent 97.72 bln rupees in Apr-Jul, accounting for 43% of its target for the full year, the official said.

 

The performance of public sector companies is monitored by the government, which has been trying to push capital expenditure to spur private investment. In the past five years, the government has increased capital expenditure by more than three times to 11.11 trln rupees in 2024-25 from 3.36 trln rupees in 2019-20. In the year ended March, these large public sector enterprises spent 8.05 trln rupees collectively, overshooting the target of 7.42 trln rupees.  End

 

Edited by Vandana Hingorani

 

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