The capital formation in India in recent years was led by the public sector, mainly the central government, state governments and state-run enterprises.
Large central public-sector entities – companies and undertakings (CPSEs) – achieved 83% of their combined capital expenditure target for FY24 in April-January by spending Rs 6.09 trillion, supporting the public capex-led economic growth revival.
On an annual basis, these entities’ capex grew by 20% on year in the first ten months of the current financial year compared with Rs 5.06 trillion in the year-ago period (78% of the FY23 target).
The capex target for the CPSEs and other agencies was set at Rs 7.33 trillion for FY24, 13% higher than the achievement of Rs 6.48 trillion in FY23.
Railways and the National Highways Authority of India (NHAI) with large budgetary support as well as petroleum/energy CPSEs are the largest public-sector investors that play a key catalytic role in crowding capex from other entities.
In April-January 2024, the Railway Board invested Rs 2.03 trillion in projects or 83% of its annual target of Rs 2.44 trillion. The achievement till January in the current financial year was 34% higher on year. The Railways have been investing heavily in capacity improvement works such as doubling/quadrupling, electrification and introducing an array of high-speed trains.
In April-January of FY24, NHAI invested Rs 1.44 trillion or 89% of its annual target of Rs 1.62 trillion. The large capex push through railways and NHAI helps boost job creation.
Petroleum CPSEs are ramping up their refining capacity and green transition. Fuel retailer-cum-refiner Indian Oil Corporation (IOC) achieved a capex of Rs 35,524 crore or 117% of its annual target of Rs 30,395 crore in April-January of FY24.
ONGC, the top CPSE player in oil and gas exploration, has achieved a capex of Rs 27,448 crore in the first ten months of the current financial year or 91% of the annual target of Rs 30,125 crore.
Fuel retailer-refiner HPCL has achieved a capex of Rs 15,010 crore till January as against the FY24 target of Rs 10,210 crore, or 147% of the annual target. Power generation major NTPC has invested Rs 18,761 crore in April-January of FY24, 84% of its annual target.
The capital formation in India in recent years was led by the public sector, mainly the central government, state governments and state-run enterprises.
As per the first advance estimate of national accounts released real GDP is estimated to show a strong growth of 7.3% in FY24. Among demand side components, GDP growth is shown to be driven by investments as measured by gross fixed capital formation (GFCF) which is likely to show the highest growth of 10.3%.
Source:financialexpress.com