For capex, CPSEs rely more on budgetary support, less on own resources & private capital

The Central government finances CPSEs’ investment through budgetary support, which is part of gross budgetary support. Various sections of the government have raised concerns about CPSEs shifting their investment pattern away from their own resources and private capital to higher budgetary support for capital expenditure. Two government departments have reportedly highlighted concerns about replacing Internal and Extra Budgetary Resources.

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CPSEs, which fund their capex, with an increasing reliance on higher budgetary outlay in the form of equity and loans from the government in key infrastructure sectors, especially telecom, railways, and road and transport sector. While some view the greater reliance on taxpayers’ money through the Budget for fixed asset creation in key infrastructure sectors as a positive sign, others see this trend as restricting CPSEs’ ability to execute their own capital expenditure plans. Sources said this approach also deviates from the vision outlined in the National Infrastructure Pipeline. For instance, the plan allocated a 38 percent share of private capital for CPSEs such as the National Highways Authority of India (NHAI) in the road sector.

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Decline in IEBR Raises Concerns for Infrastructure Sector

However, the IEBRs mobilised by such entities have come down progressively in the last five years. A source said that the increasing indebtedness of certain public entities like NHAI could be one of the reasons for the reduction in IEBRs. Sources also expressed concern over CPSEs reducing their resource mobilisation efforts both independently and through the private sector, particularly in the infrastructure and roads sectors. They pointed out that NHAI has reduced its IEBR to nil in the financial years 2022-23 and 2023-24, with no signs of reversing its reliance on higher budgetary outlays for resource mobilisation.

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