PSUs to loosen purse strings

While India Inc could be a tad circumspect about committing to capex spends, around 17 of the biggest PSUs in India have decided to invest close to US$ 30 bn in FY13. Today's chart of the day highlights the capex commitment of some of the biggest PSUs in the country for the current financial year. It should be noted that these PSUs have total capital availability of around US$ 51 bn and hence, the capex can easily be taken care of without any debt burden. One may wonder why PSUs have announced such huge capex when the private sector has been cancelling or delaying capex plans. We believe the main reason for this is that PSUs were sent notices from the Finance Ministry to meet their planned investment targets. In case they failed to invest the surplus cash, they would be forced to declare special dividends. Finance Minister P Chidambaram is of the view that PSUs should not be sitting on a mountain of cash when the economy is struggling to grow. Hope other corporate firms too take cues from this and invest in capacities so that the long term India growth story is kept intact.

Data Source: Financial Express