Capex by CPSEs, four key government agencies declines 23% y-o-y in July

New Delhi: Capital expenditure by large central public sector enterprises (CPSEs) and four key government entities moderated 23% year on year in July to ₹53,406 crore, partly due to an unfavourable base, a senior official said.

Public capex, including that by CPSEs, remains critical to the country's economic growth this fiscal, as external headwinds-especially uncertainties caused by the US' announcement of a 50% additional tariff on India-can potentially weigh on domestic private investments, experts reckon.

To be sure, spending by the CPSEs and four large government agencies having annual capex targets of at least Rs 100 crore each-the Railway Board, National Highways Authority of India (NHAI), Delhi Metro Rail Corporation and Damodar Valley Corporation-rose 2.5% on year between April and July to ₹2.21 lakh crore, thanks to a 15% expansion in the June quarter.

In July last year, capex by CPSEs and the four agencies had surged, thanks to the release of pent-up demand following deceleration in the June quarter caused by the administrative slowdown around the 2024 general election.

For its part, the central government, too, has sharply raised its capital spending this fiscal. Its capex jumped 52% in the June quarter to ₹2.75 lakh crore, albeit on a favourable base. The finance ministry has already asked various departments and CPSEs to undertake capex regularly, and has been monitoring it regularly.

This is crucial because the intended capex of private players is expected to decline to ₹4.9 lakh crore this fiscal from ₹6.6 lakh crore in 2024-25, according to the first round of the Forward-Looking Survey on Private Sector Capex Investment released by the statistics ministry on April 29.

Rail Board remains top spender
Between April and July, the Railway Board remained the top spender, with a capex of ₹79,152 crore, followed by the NHAI at ₹45,683 crore, showed the latest finance ministry data. ONGC, with ₹11,155-crore capex in the first four months, Indian Oil Corporation (₹10,733 crore), NTPC (₹11,782 crore), PowerGrid Corporation (₹9,045 crore), BPCL (₹4,806 crore), and Coal India (₹4,702 crore) are among the top CPSE spenders.

These CPSEs and the four government entities have set a total capex target of ₹7.85 lakh crore for 2025-26, which is almost 3% lower than the actual spending of ₹8.07 lakh crore last fiscal.

The International Monetary Fund had in July projected India to remain the world's fastest-growing major economy over the next two years. It had pegged the country's growth at 6.2% for FY26 and 6.3% for FY27, more than double the global averages.

But with US announcing extra tariff on India now, various agencies are trimming their earlier forecasts for the country, with some expecting a 30-80 basis point hit to growth due to the duty burden.