Invest surplus funds to expand, Centre tells PSUs

To promote investments and growth

 The finance ministry has asked cash-rich public sector companies (PSUs) to utilise surpluses for expansion and overseas acquisitions, a move that will promote investments and growth.

“We have asked cash-rich PSUs to expedite utilisation of surplus fund on expansion and overseas acquisition,” a top finance ministry official said.

The central PSUs, including some bluechip companies, are estimated to have surplus capital of over Rs 1.5 lakh crore and have not been able to work out plans for utilisation of funds.
Earlier this year, the Prime Minister’s Office (PMO) had directed cash-rich PSUs to go for aggressive investments in the current fiscal, mainly in the infrastructure sector.

Fiscal deficit

The government wants PSUs to propel the economy with investments and help reduce the fiscal deficit to 5.1 per cent of GDP in the current fiscal.

The government has constituted a committee of the Department of Public Enterprises (DPE), headed by Department of Economic Affairs Additional Secretary Shaktikanta Das, to review the guidelines on investment of excess cash available with state-owned units.

The panel is in the process of forming a consensus, in consultation with Sebi, in this regard. The excess cash available with about 20 CPSEs, including PFC, Coal India, BHEL, ONGC, NTPC and PGCIL, is mostly deposited in banks and earns interest at the rate card.
The government wants that these units should invest their funds productively to generate output and employment.

Infrastructure sector

The country’s infrastructure sector needs over US$1 trillion in the next five years. The government has said it alone cannot make such a huge investment, therefore, importance is being given to public-private partnership.

India’s Gross Domestic Product (GDP) growth rate touched a nine-year low of 6.5 per cent in 2011-12 and its fiscal deficit ballooned to 5.9 per cent during the same period.

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