TLI Staff
New Delhi: Seeking to turn the investment cycle and boost growth, Finance Minister Nirmala Sitharaman has asked public sector companies to clear vendor payments on time and firm up their capex for the next two quarters of the current fiscal.
Given that central public sector enterprises (CPSEs) like Indian Oil, ONGC, NTPC and Coal India contribute significantly to overall public procurement of about $500 billion annually, accelerating their project execution could push the slowing economy.
“Public procurement as a percentage of GDP in the country is estimated between 20 per cent to 22 per cent. For a size of Indian economy at $2.7 trillion, this amounts to public procurement to the tune of $500 billion annually. CPSEs are a major contributor to public procurement of works, goods and services,” a Finance Ministry statement said.
Nirmala Sitharaman along with top Finance Ministry officials met chiefs and senior executives of CPSEs on Saturday as part of her stakeholder consultation in the wake of economic slowdown. The Minister reviewed their capital expenditure till date and plans for the next two quarters of this financial year.
The participating CPSEs presented their Capital Expenditure (Capex) till August 2019 with the Finance Minister and explained their plans for the next two quarters.
As per the plan presented to the Minister, petroleum major ONGC has a capex plan of Rs 32,921 crore for FY 2019-20. Its capex till August 2019 was Rs 8,777 crore which was 26.66 per cent of the total planned capex.
Indian Oil Corporation has a capex plan of Rs 25,083 crore of which Rs 8,173 crore (32 per cent) has been spent. Power company NTPC has made CAPEX of Rs 8,490 crore (42 per cent) out of a plan of Rs 20,000 crore. The CPSEs which participated in the meeting have plans of making capital expenditure of Rs 50,000 crore in the next quarter.
“The Finance Minister stressed that Capex needs to be given a vigorous push in the next two quarters. Therefore, Capex plan has to be firmed up and followed up with ground level execution. Ministry of Finance would monitor the capital expenditure regularly. CPSEs must ensure that regular payments are cleared expeditiously as it spurs investment cycle and establish e-Billing portal for enabling stakeholders to track the status of payments,” the official statement after the high-level meeting said.
The government wants the CPSEs to double their contribution to the gross domestic product (GDP) and be the “third major source” of revenue for the Centre after direct and indirect taxes.
“CPSEs must make efforts to reduce the country’s imports bill and expanding India’s global strategic reach by 2022,” the statement said.
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