Faced with difficult government finances, Prime Minister Manmohan Singh on Tuesday asked cash-rich 25 central public sector enterprises to invest their surplus fund of Rs. 2.5 lakh crore to reignite economic growth.
At a meeting convened by Dr. Singh and attended by Finance Minister P. Chidambaram, the top PSUs were given a stern message that either they invest their huge surplus or pay it back as special dividend to the exchequer.
“Drawing attention to the large surpluses of the CPSEs, the Prime Minister asked them to use that surplus for their own benefits and benefit of the economy. They should use it for driving investment, growth and jobs. Investing such surplus would help in reigniting growth impulses ... ,” a statement from the Prime Minister’s Office said.
The Prime Minister said the country should achieve a growth level of 8-8.5 per cent regardless of what happened in the world economy. “We must learn to swim and swim fast enough, whatever be the circumstances,” Dr. Singh said.
Briefing reporters about the meeting, Heavy Industries and Public Enterprises Minister Praful Patel said: “Central public sector enterprises have large investible surpluses. In fact, there are more than Rs. 2.50 lakh crore investible surpluses with them. The government would like them to grow and invest in their development plan. If the PSUs do not deploy the investible surpluses in their own growth and expansion, that money should not lie idle and it must be paid back to the government by way of special dividend.”
Heads of 25 PSUs, including the cash-rich ONGC, Coal India, BHEL, NTPC, SAIL and NMDC attended the meeting.
Mr. Patel said a committee of secretaries would be set up to look into the issues of PSUs like autonomy and regulatory clearances, besides investment of surplus funds. It would be headed by Cabinet Secretary Ajit Kumar Seth.
The meeting comes in the wake of the government finding it hard to meet the fiscal deficit target of 5.1 per cent of the Gross Domestic Product for the current fiscal.
The Prime Mister said, “Even if the international demand is not there, domestic demand should drive the investment and our endeavours.”
The CPSEs contribute over 6 per cent of the country’s GDP, and their profits are at a record level of Rs.1,00,000 crore.
Dr. Singh said there was a need for improving coordination in expediting project clearances and for generating an appropriate long-term vision.
He asked the CPSEs to focus on increasing the efficiency of operations, aim for achieving world-class competencies, the need to commit to innovations in technology, human resources and creating a culture of optimism.
He asked the Ministry of Heavy Industry & Public Enterprises and the Department of Public Enterprises to work with the Finance Ministry, the Planning Commission and the National Manufacturing Competitiveness Council towards addressing these issues.
“We are a government determined to overcome difficulties in the spirit of national enterprise,” he added.
Mr. Patel said, “Many of the CPSEs had the issues, which are larger issues of environment and other regulatory clearances, including oil subsidies and these issues will be addressed.”
“The CPSEs submitted that multilateral checks and balances are coming in the way of decision making and in turn resulting into sub-optimal performance,” said U.D. Choubey, Director-General, SCOPE.