FM urges CPSEs to spend ‘aggressively’: (The Hindu)
- Finance Minister Arun Jaitley on Thursday asked central public sector enterprises (CPSEs) to aggressively push capital expenditure and warned against any laziness as the government looks to boost growth through increased public spending.
What were the demands?
- The minister asked CPSEs to give “liberal dividends” to the government so that the money could be used for funding physical-social infrastructure.
- CPSEs were asked to raise more debt and not to rely entirely on cash and free reserves for finding new investments and capital expenditure.
- The CPSEs were asked to consider declaring liberal dividends so as to promote more productive use of such resources for financing much needed physical and social infrastructure.
- The CPSEs were also asked to release due payments expeditiously to help improve the liquidity in the market, besides raising more resources through innovative financing arrangements like InvITs, and monetization of assets.
- Since private investment is low, public spending along with investment from CPSEs is expected to drive economic activities and help perk up growth.
- Finance Minister stressed that the CPSEs may not only have to complete their budgeted capital expenditure but should also look to aggressively push capital expenditure in the interest of boosting investment in Indian economy.
- He indicated that the capital expenditure programme would again be reviewed at the end of November/early December and added that in the discussions for raising capital investments, it also came to attention that most public sector undertakings have very low or no debt on their balance sheet which is reflected in their low debt to equity ratios.
Why did the meeting take place?
- The meeting took place against the backdrop of restrained private investments and sagging growth, which slowed to a three-year low of 5.7% in the first quarter of the current fiscal.
- Heads of major CPSEs in sectors like petroleum, defence, power, road transport, railways, coal, mines, steel and atomic energy have assured the government of raising capital expenditure by an additional Rs. 25,000 crore.