Fin min asks CPSEs to spend additional Rs 25,000 cr on capex to boost investment

Arun Jaitley

The Finance Ministry has asked Central Public Sector Undertakings (CPSEs) to spend an additional Rs 25,000 crore towards its capital expenditure (capex) programme, in a bid to boost investment in the economy.

The Finance Minister Arun Jaitley today reviewed the capital expenditure programme and status of dividend distribution of CPSEs and authorities with the secretaries of concerned ministries and heads of such companies, pertaining to sectors such as petroleum, defence, power, road transport, railways, coal, mines, steel, and atomic energy.

The government had budgeted a capex of Rs 3.85 lakh crore during 2017-18 for PSUs.

"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," the government said in a release today.

Finance Minister also indicated that the capex of these companies will again be reviewed at the end of November or early December, Economic Affairs Secretary Subhash Chandra Garg told the reporters here.

The discussions for raising capital investments come at a time when most PSUs 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.

Companies with free reserves and surplus cash have been asked to consider declaring liberal dividends to promote more productive use of such resources for financing much needed physical and social infrastructure.

CPSEs have also been asked to consider raising more resources through innovative financing arrangements like InvITs, toll-operate-transfer model for roads and highways, monetization of assets, to undertake more projects of capital nature.

The government's push for additional amount on infrastructure sector comes after a group of ministers held a series of meetings over the last week to work out a strategy to revive the economy's growth.

GDP growth has slowed down to 5.7 percent in April-June from 7.1 percent a year ago. The slowdown has been a result of poor manufacturing growth and private investment.

The government is also known to be working on providing a fiscal stimulus in the range of Rs 40,000 to Rs 65,000 crore to boost growth.