New Delhi: Finance Minister Arun Jaitley asked central public sector enterprises (CPSEs) to aggressively push capital expenditure and warned against any slackness as the government looks to boost growth through increased public spending.
While reviewing the capital expenditure plans of important CPSEs, estimated at Rs 3.85 lakh crore, the minister also asked them to give "liberal dividends" to the government so that the money could be used for funding physical-social infrastructure.
The meeting took place against the backdrop subdued private investments and sagging growth, which fell to three year low of 5.7 per cent in the first quarter of the current fiscal.
Heads of major CPSEs in sectors like petroleum, defence, power, road transport, railways, coal, mines, steel and atomic energy have assured the government of raising capital expenditure by an additional Rs 25,000 crore, the finance ministry in a release.
"Finance Minister, while addressing the Secretaries and CMDs, stressed that the CPSEs may not only complete their budgeted capital expenditure but should also look to aggressively push capital expenditure in the interest of boosting investment in Indian economy," it said.
Jaitley, while appreciating the commitments of the ministries and CPSEs, assured that the government would make available adequate resources but "no slackness under any circumstances would be acceptable".
He indicated that the capital expenditure programme would again be reviewed at the end of November/early December, the statement said.
It added that in the discussions for raising capital investments, it also came to attention that most public sector undertakings have very low or no debt on their balance sheet which is reflected in their low debt to equity ratios.
"CPSEs were, therefore, asked to raise more debt and not to rely entirely on cash and free reserves for finding new investments and capital expenditure," the release said.
The CPSEs which have free reserves and surplus cash "were asked to consider declaring liberal dividends" so as to promote more productive use of such resources for financing much needed physical and social infrastructure, the finance ministry's statement said.
The CPSEs were also asked to release outstanding payments expeditiously to help improve the liquidity in the market, besides raising more resources through innovative financing arrangements like InvITs, and monetisation of assets.
After the meeting, Bharat Electronics Ltd (BEL) Chairman and Managing Director M V Gowtama said: "Already year on year capex has been increased by CPSEs. The government is ensuring we are on track... We have already given ambitious projects, they (government) are reviewing it."
Since private investment is low, public spending along with investment from CPSEs is expected to drive economic activities and perk up growth.
Since early 2016, growth has slackened for six consecutive quarters, with India losing the fastest growing economy tag to China for the second straight quarter.
For the first quarter ended June, economic growth hit a three-year low of 5.7 per cent.
Besides the falling GDP growth rate, exports are facing strong headwinds and the industrial growth is the lowest in five years. Current account deficit (CAD) -- the difference between inflow and outflow of foreign exchange -- rose to 2.4 per cent of GDP in April-June.
Updated Date: Sep 29, 2017 08:53 AM