Finance ministry asks departments, PSUs to expedite capital expenditure

As part of the Modi government’s bid to boost economic activity and pump in liquidity into the infrastructure sector, senior finance ministry officials are meeting officials from other departments, as well as state-owned firms. The PSUs are being told to boost capital expenditure (capex), while the departments, especially those related to infrastructure sectors, are being told to expedite spending of allocated sums and release outstanding payments to contractors.

Economic Affairs Secretary Atanu Chakraborty and Expenditure Secretary Girish Chandra Murmu on Thursday met officials from the ministries of road transport & highways, railways, telecom, and housing & urban affairs to review their capex programme.

The two secretaries, it is learnt, are expected to meet representatives of other infrastructure-related departments, as well as managing directors and senior officers of PSUs, on Friday.

“The departments are being told to clear pending payments to contractors, especially those in the micro, small & medium enterprises (MSMEs) sector. They will be directed to front-load their capex allocations, while PSUs are also being told to boost capex. The idea is to create more liquidity in the infrastructure sector,” said an official.

These capex reviews come just a day after Finance Minister Nirmala Sitharaman met representatives of the infrastructure sector — the latest of the many sectoral meetings she has had in the past one month. 

The meetings came against the backdrop of India’s gross domestic product growth slumping to a six-year low of 5 per cent in the April-June quarter. Experts have pointed out that a capex boost focused on infrastructure by the private sector and the government is a way out of the slowdown as the Centre looks to create jobs. In his Independence Day speech, Prime Minister Narendra Modi had said the government will invest Rs 100 trillion on developing modern infrastructure to help nearly double the size of the economy to $5 trillion in the next five years.

In the meeting on Wednesday, representatives of infrastructure companies like Hindustan Construction, NHAI, and Ircon had discussed issues related to financing, land, capital, and environmental clearances. There were suggestions on speeding up the execution of projects.