Why the Centre’s PSE capex story isn’t as rosy as it sounds
The Indian Express last week, union minister for petroleum and natural gas Hardeep Singh Puri said that PSEs had utilized their profits for capex investment, and that as of February, public sector oil and gas companies were implementing projects with a combined investment of ₹5.67 trillion. But this is spread over several years, and the pace of growth would be a better indicator. One measure of PSE capex is ‘net block’, or the sum of a company’s assets on a given date, adjusted for depreciation.
In 2022-23, net block of all operating PSEs rose 5.7% (the change in net block over a year can represent the incremental capital investment in that year). In the covid era, and after, growth in PSE capex has been markedly slower than a decade ago. Overall government capex—by government ministries and PSEs—has dropped from 8.8% of GDP in 2008-09 to 7% in 2020-21.
Private sector capex has seen an even steeper fall since the 2008 financial crisis, from 25% of GDP in 2008-09 to 19% in 2020-21. And the drop in PSE capex is in spite of an increase in the number of operational PSEs, from 213 in March 2009 to 254 in March 2023. Even as the number of PSEs has grown, only a handful of sectors account for a bulk of PSE assets.
Power-generation companies (such as NTPC) and oil companies accounted for 52% of PSE assets in 2022-23, though this is down from the 60% it was a decade ago. One sector that has increased its share of PSE assets in a significant way in the last decade is transport and logistics. This included companies building and servicing the dedicated freight corridor project, subsidiary companies of oil majors set up to provide fuel transport services, and the main public sector shipping company, the Shipping Corporation of
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