CPSE capex: Decent show despite 2nd Covid wave, firms aim to meet FY22 target by December

In April-May of the current financial year, Railways was the largest investor by deploying capex of about Rs 28,000 crore or 13% of its annual target of Rs 2.15 lakh crore.

Large central public-sector entities – companies and undertakings – achieved 10% of their capital expenditure target for FY22 in the first two months of the current financial year, by spending Rs 63,000 crore, according to official sources. Given the second Covid wave that struck the country, this is a decent number; these entities achieved just about 2% of the annual capex target in the year-ago period when nation-wide lock-down brought economic activities to a standstill.

With the union government’s thrust on investment-led economic growth revival, the finance ministry is learnt to have recently asked the CPSEs to accelerate the pace to achieve the FY22 capex target by the third quarter itself. “The idea is Q4 is available for enhancing the capex further,” an official said.

The combined capital expenditures by 40-odd large CPSEs and departmental undertakings – all with annual capex budgets of above Rs 500 crore – are estimated to be Rs 6.3 lakh crore in FY22, an increase of 37% on year.

In April-May of the current financial year, Railways was the largest investor by deploying capex of about Rs 28,000 crore or 13% of its annual target of Rs 2.15 lakh crore. Railways investment is largely in the laying of new lines, doubling of tracks, augmenting traffic facilities and construction of rail over bridges/road under bridges.

The National Highways Authority of India (NHAI) invested Rs 15,000 crore or 12% of its FY22 target in April-May. NHAI is currently developing several expressways including Delhi-Mumbai, Delhi-Katra, Bengaluru-Chennai and Delhi-Dehradun.

During the period, upstream oil CPSE ONGC reported capex of about Rs 3,500 crore or about 12% of its full-year capex target. The oil explorer’s capex deployment was mainly in KG 98/2 Cluster II, Mumbai High South Redevelopment Phase IV, Life Extension of well platforms and Heera Redevelopment Phase-III Project. Fuel retailer-cum-refiner Indian Oil Corporation invested Rs 2,100 crore (7% of full-year target). It is expanding the capacity of Barauni refinery from 6 million tonne per annum (MTPA) to 9 MTPA, Panipat refinery from 15 MTPA to 25 MTPA and Gujarat refinery from 13.7 MTPA to 18 MTPA.

Power producer NTPC – which is building 1,980 MW thermal plant in North Karanpura, 1,600 MW Telangana power project, 300 MW Nokhra solar power plant and 300 MW Shimbhoo Ka Burj solar project – invested Rs 2,500 crore or 10% of its annual capex target in April-May 2021.

Coal India invested about 7% of its FY22 capex target in the first two months of the current financial year in first-mile connectivity projects, land acquisition, replacing ageing equipment with new modernised machines, evacuation measures, etc.

Dedicated Freight Corridor Corporation, which is targeting to complete western and eastern dedicated freight corridors by June 2022, has invested about 5% of its FY22 annual capex target of Rs 20,000 crore in April-May.

In the last few years, CPSE capex (about 80% from own funds and 20% budget support) has remained robust. Capex by these entities was Rs 4.6 lakh crore or 92% of the annual target for FY21; this was 4.3% higher than the capital spending by these entities in FY20.

While state governments fell substantially short of their capex targets, the Union government has achieved Rs 4.25 lakh crore or 97% of its FY21 revised capex target (up 26% on-year). It is estimated to invest Rs 5.54 lakh crore in FY22, an annual rise of 30%.

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