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Capital expenditure by central public sector enterprises (CPSEs) and other government undertakings fell 14% on year in the first five months of the current financial year, dragged down by slower pace of investment by railways and the National Highways Authority of India.
Railways and NHAI’s investments are largely funded through budget. Both entities accounted for 55% of the CPSEs’ capex target for FY25. The CPSEs, having annual capex target of Rs 100 crore and above have set a combined target of investing Rs 7.8 trillion in FY25. The CPSEs have invested Rs 2.68 lakh crore in April-August of FY25 compared with Rs 3.1 lakh crore in the year-ago period.
In April-August 2024, Railways Board capex fell by 31% to Rs 86,730 crore while NHAI investments fell by 9% to Rs 68,956 crore.
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Taking note of the slower pace of capex, Finance Minister Nirmala Sitharaman recently exhorted ministries including the roads ministry to expedite capital expenditure and make up for the shortfalls in the first quarter and the second quarter targets in the third quarter of the current financial year itself.
The slowdown in public capex—Centre, states and CPSEs- so far in the current financial year has been largely due to the impact of the general election in April-May when everything came to almost a standstill.
After railways and NHAI, petroleum sector undertakings in aggregate are the third biggest public sector investors in the CPSEs and they have made up for the loss of investment in the election months.
Fuel retailer-cum-refiner Indian Oil Corporation achieved a capex of Rs 16,359 crore in the first five months of FY25, up 6% from Rs 15,375 crore in the corresponding period a year ago.
ONGC, the top state-run player in oil and gas exploration, invested Rs 14,542 crore in April-August 2024, up 12% on year. NTPC, which is expanding capacity across many of its plants and foraying into cleaner energy, has more than doubled investment to Rs 13,507 crore in April-August 2024 from the year ago period.
States’ capital expenditure likely fell by 17% on-year in the first four months of the current financial year, prolonging the moderation across the public sector capex space. The Centre’s capex fell by 17.6% during the period.