NEW DELHI: State-run companies, who are being pushed to meet capital expenditure targets in order to strengthen the country’s industrial growth which grew by just 0.2 per cent last September, are finding it difficult to meet deadlines given financial and project implementation constraints.
The government has already cracked the whip asking all PSUs to achieve 75 per cent of capex spending by December-end and more than 100 per cent by March-end. However, the chances of meeting the target are slim, say officials who attended the fifth of a series of meetings held at North Bloc on the issue.
A total of 10 PSUs from power, mines and atomic energy ministries who met finance ministry officials on Friday have managed to spend less than 40 per cent of the capital outlay of over Rs 61,000 crore earmarked for the year.
The problem for these PSUs is that besides being a year beset by the pandemic which has slowed down project implementation, they are short of cash. According to the chairman-cum-managing director of a power sector PSU “for several years we have been shelling out extraordinary dividend pay-outs to help the government exchequer, some of us have also gone for share buy-backs, which has depleted our reserves.
”The chairman pointed out that even earlier this month a communique from the government asked PSUs who normally pay a high dividend to “consider” paying dividend on a quarterly basis and the rest on half-yearly basis.
“These demands place cash flow problems for us, especially in a year when sales are slow and orders are few and far in between.” Several PSUs have been raising money and running expenses through a culmination of bonds and bank loans to pay for the capex plans which they have been told has to be substantially increased next financial year.
Officials say that oil sector PSUs have been told to increase their capex from the current Rs 1 lakh crore to Rs 2 lakh crore next fiscal