For the government machinery fighting the rupee’s slide, a GDP growth of 4.4% during April-June this year—the lowest in the last 16 quarters—is an ominous sign demanding immediate measures for stepping up capital expenditure and serious deliberations on improving industry sentiments for perking up long-term investments.
It is in this backdrop that two meetings, scheduled to be held in the coming fortnight at the top level of the government, hold immense significance.
The first one, on September 9, has been called by Pulok Chaterji, the principal secretary to the Prime Minister, to review capex plans of the central public sector enterprises (CPSEs).
The second one, on September 17, has been called by cabinet secretary Ajit Kumar Seth, to discuss the recommendations of the Ashok Chawla committee on allocation of natural resources, submitted to the government in May 2011. Considering the damage that the mismanagement of the allocation of natural resources has done to the investment milieu in the UPA regime, sitting on the Chawla panel suggestions for over two years has been a bad idea. Given this setting, any indication by the government on making the process for allotment and handling of coal mines or oil and gas wells industry-friendly would at least lift the sagging industry sentiments.
First, let’s talk about the CPSE capex plans that can infuse the much-needed quick investments. This is critical as the private sector’s appetite for investment is badly battered and it will take considerable amount of both time and effort to bring it back. So, the CPSE capital expenditure can at least keep the ball rolling.
The CPSE capex and investment plans are being monitored by the PMO since FY13. The idea, obviously, is to utilise the cash-surpluses available with the former to push economic growth. The PMO had identified 17 CPSEs with substantial cash surpluses and had fixed R1,41,389 crore as the investment target—the achievement so far, it said, is of R1,11,913 crore, about 80% of the target.
The outstanding performers, as listed by the PMO, were Neyveli Lignite Corp (108%), Power Grid (100%), Indian Oil (97%), NTPC (94%), ONGC (89%), Oil India Ltd (83%), Coal India (76%) and NHPC (81%), with a total of R90,000 crore of capex. For the current financial year, 7 CPSEs have been added to the list including RINL and Nuclear Power Corp. The target for FY14 CPSE capex is R1,41,912 crore. A review of the progress made in the first five months