FinMin nudges large CPSEs, key agencies to boost capex

The finance ministry is nudging large central public sector enterprises (CPSEs) and key government agencies to boost their capital expenditure (capex) in this financial year, said a senior official, amid scepticism over a broad-based rebound in private investments given the global turmoil.

The move comes on top of similar instructions to various ministries and departments earlier this fiscal to front-load their capex, aimed at supporting economic growth.

The CPSEs are responding, according to the official, who did not wish to be identified.

The combined capex of large CPSEs and four key government agencies-each with an annual target of at least ₹100 crore-increased almost 21% year-on-year in May to ₹55,239 crore.

On a month-on-month basis, their capex rose from ₹49,781 crore in April, the official said.

Apart from the CPSEs, the data covered the Railway Board, National Highways Authority of India (NHAI), Delhi Metro Rail Corporation and Damodar Valley Corporation. "We do hope that private investments hold up this fiscal but we also have to factor in potential risks to such investments from global headwinds," said the official. "Public capex, including that by CPSEs, will serve as a buffer against risk to growth from global factors."

In April-May, the Railway Board led with a capex of ₹44,385 crore, followed by the NHAI (₹20,323 crore), ONGC (₹5,511 crore), Indian Oil Corporation (₹4,980 crore) and NTPC (₹4,558 crore), showed the latest finance ministry data. Last fiscal, the railways, NHAI and petroleum firms were the key spenders.

These CPSEs and the four government entities have set a total capex target of ₹7.85 lakh crore for 2025-26. In the previous fiscal, their actual spending touched ₹8.07 lakh crore, having exceeded the revised target of ₹7.87 lakh crore.

The Centre, on its part, sharply raised its capital spending in the aftermath of the Covid-19 pandemic to spur growth, banking on the multiplier effect of such expenditure. The intended capex of private players is expected to decline to ₹4.9 lakh crore in 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. "The slightly lower intended capex for FY26, though still above FY24 levels (₹4.2 lakh crore), reflects cautious planning after a strong FY25," the finance ministry said in its monthly economic report for April.

The report, however, flagged US tariff uncertainties as a key external vulnerability, indicating that "private sector capital expenditure could lag behind, with firms adopting a more cautious stance amid global uncertainty and tighter financial conditions".

The Centre has set a capex target of ₹11.21 lakh crore for this fiscal. Its capex of ₹10.52 lakh crore last fiscal had exceeded its revised target of ₹10.18 lakh crore.