CPSEs may raise capex target by 50 pc in FY22

Complementing in good measure the Centre’s effort to accelerate public sector investment expenditures, large central public sector entities (CPSEs) and departmental undertakings may rack up their capex plans by 50-60 per cent to Rs 7.5-8 lakh crore in FY22. This wouId be done in order to generate the extra resources, the CPSEs will unlock capital trapped in the immovable assets including surplus land parcels on an unprecedented scale.

“While a smaller part of this enhanced investments next year will be supported by the budget, a large part will likely be funded via enhanced borrowings and asset monetisation proceeds of the CPSEs such as railways, NHAI, GAIL and Power Grid,” said a source.

Given the level of internal resources, some of these companies may resort to the market to raise funds. Despite the pandemic, these entities, each with annual capex budget of Rs 500 crore or above, may reach close to the capex target of Rs 4.95 lakh crore in FY21.

The CPSEs (excluding the likes of the railways and NHAI) will likely set a target to invest about Rs 3.5 lakh crore for FY22, 64 per cent more than the estimate for FY21. Recently, the Prime Minister’s Office asked oil sector CPSEs to double their capex from the orginal estimate for FY21 by investing Rs 2 lakh crore.

While there isn’t much scope to invest beyond Rs 1 lakh crore in FY21 due to paucity of time, these firms are expected to significantly step up their capex in FY22,  Coal India has plans to double capex to Rs 20,000 crore in FY22 from
Rs 10,000 crore initially planned for FY21. It has revised its investment target to Rs 13,000 crore for FY21.