The government has set October 15 as the deadline for central public sector undertakings (PSUs) to clear overdue payments to vendors and pushed them to meet their planned capital expenditure — or capex — on time. The Centre expects 244 public sector companies to make nearly Rs 4 lakh crore of capital expenditure in the current financial year.
Finance Minister Nirmala Sitharaman, who reviewed capital spending programmes with heads of 32 maharatna and navratna central public sector enterprises (CPSEs) on Saturday, said state-owned companies have been asked to front-load investment for the second half of the current fiscal.
CPSEs have been asked to submit a road map for the next four quarters by October 15, she said after the meeting. “It was decided that they will clear all pending dues by October 15 and by October 15 they will have a portal through which all dealers and contractors shall start monitoring their payment,” Sitharaman said.
Plan is to make CPSEs ‘third major source’ of revenue
By pushing CPSEs to clear outstanding dues to vendors by October 15 and meet their capex targets for the current fiscal, the Centre aims to give a shot in the arm to the slowing economy — with growth having fallen to a 25-quarter low in April-June this fiscal. As per a Finance Ministry statement issued on Saturday, the government “wants the CPSEs to double their contribution” to the GDP and be the “third major source” of revenue for the government.
“Meeting (will be held) with the RBI and the Finance Secretary and selected number of CPSEs to talk about why bank guarantees are becoming a big hitch or hurdle in government paying up the 75 per cent post arbitration awards. If that is the case, I want RBI’s help also to sit with Finance Secretary and sort this out,” she added.
Also, CPSEs have been asked to detail the lifespan of arbitrations that lock payments after disputes with vendors and contractors, the FM said.
“From the government’s side, every attempt to get every payment out to those to whom it belongs is almost complete,” she stressed.
The government is pushing ministries, departments and CPSEs to meet their capital expenditure in the next two quarters, as it seeks to spur economic growth which has fallen to a 25 quarter low of 5 per cent in April-June.
Finance Secretary Rajiv Kumar said 34 central PSUs have already spent Rs 48,077 crore till August and have detailed spending of another Rs 50,159 crore till December 2019.
An additional Rs 54,700 crore would be spent in the upcoming January-March quarter. The expenditure plan is on track and companies have expressed their willingness to meet the target set for the current fiscal, he said.
The participating CPSEs presented their capex till August 2019 to the Finance Minister and explained their plans for the next two quarters.
For example, ONGC has a capex plan of Rs 32,921 crore for 2019-20. Its capex till August 2019 was Rs 8,777 crore, which was 26.66 per cent of the total planned capex for the fiscal. Indian Oil Corporation has a capex plan of Rs 25,083 crore, of which Rs 8,173 crore (32 per cent) has been spent. NTPC has made capex of Rs 8,490 crore (42 per cent), out of a plan of Rs 20,000 crore.
Expenditure Secretary Girish Chandra Murmu said capex of all the 244 PSUs will be about Rs 4 lakh crore for the current fiscal, which could also go up depending on the requirement.
Efforts are being made so that investment is on track and there is no liquidity crunch, he added.
The government also asked the public sector firms to check why nearly Rs 60,000 crore worth of purchases were made outside the GeM portal (Government-e-Marketplace).
“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 Finance Ministry said in a separate statement.