Govt tries to boost capex

That the government is keen on speeding up economic growth is quite obvious. After announcing big cuts in the corporate tax rates on September 20, thus bring some parity between India and east Asian economies in terms of the direct tax structure, it has been trying to get investment.

On September 28, Finance Minister Nirmala Sitharaman met the top brass of Maharatna and Navratna Central public sector enterprises (CPSEs) to review their capital expenditure. “This meeting was held as part of the series of meetings that the Finance Minister has been having with various stakeholders and the measures that have been taken to accelerate the economic growth rate,” an official release said.

The meeting was attended by senior Ministry officials and representatives of 32 CPSEs.

Public procurement as a percentage of GDP in the country is estimated between 20 per cent to 22 per cent. This amounts to $500 billion annually. CPSEs are a major contributor to public procurement of works, goods, and services.

The participating CPSEs presented their capital expenditure (capex) till August 2019 with the Finance Minister and explained their plans for the next two quarters. The CPSEs which participated in the meeting have plans of making capital expenditure of Rs 50,000 crore in the next quarter, with ONGC’s capex plan topping at Rs 32,921 crore for FY 2019-20.

The Finance Minister stressed that capex needs to be given a vigorous push in the next two quarters. Her Ministry would monitor the capital expenditure regularly, the release said. Further, “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. Special efforts must be made to clear dues of MSMEs and resolve cases…”

A day before, Sitharaman had reviewed the position of capex of select ministries having large outlays. The meeting was attended by secretaries and financial advisors of all major ministries.

While government initiatives to boost the economy are good, they have to be accompanied with reforms. Otherwise, they would be reduced to photo-ops.