Increase Capex To Boost Growth, Government Tells State-Run Firms

The government has asked state-owned companies to step up their capital expenditure as it works on a plan to boost the economy after growth fell to its lowest in three years.

Finance Minister Arun Jaitley reviewed the capital expenditure of central public sector enterprises. “(I) will not be able to tell the exact amount as there were many CPSEs but overall the commitment is, let us do it better for making (higher) growth possible,” said SK Acharya, chairman of NLC India, a navratna. The government asked us to increase capex for higher growth,” he told reporters.

India’s GDP growth slowed to 5.7 percent in April-June after last year’s demonetisation, largely due to a slowdown in manufacturing. Transition to the Goods and Services Tax hasn’t been smooth as small businesses find it difficult to switch to the new regime that calls monthly online returns. The government is expected to announce measures for sectors like exports, manufacturing and small businesses.

Also Read: Additional Measures On The Anvil To Boost Growth, Arun Jaitley Says

Private investment and credit growth are yet to pick up due to excess capacity and rising bad loans of banks. The economy is largely supported by public spending.

“The government is ensuring that are we on track or not. We have already given ambitious projects so they are reviewing it,” said MV Gowtama, chairman of aerospace and defence manufacturer Bharat Electronics Ltd.

Answering a question on whether the state-run companies were asked to increase their dividend, Gowtama said there was no such discussion.

The government has budgeted Rs 67,529 crore from the payouts from public sector enterprises. It got Rs 77,050 crore in the year ended March.