Finance Ministry meets officials from state-owned firms, discusses surplus fund utilisation

Amid fiscal constraints, finance ministry today held discussions with public sector companies, including NTPC and PowerGrid, on the issue of utilizing surplus funds available with PSUs.

Economic affairs secretary Arvind Mayaram met top officials of bluechip PSUs and discussed possible ways to efficiently utilise their surplus cash that would boost investments and spur economic growth, sources said.

The meeting assumes significance since the Finance Ministry had set a January time frame to review the utilization of surplus funds by PSUs. Senior officials from various public sector undertakings, including NTPC and Power Grid, participated in the meeting, sources added.

According to them, the discussions were focused on PSUs paying special dividends -- from their cash surplus -- to the government, which is looking for more revenue realization ways.

At present, about 25 central PSUs, including blue chip companies like ONGC, GAIL, NTPC, SAIL, and BHEL have surplus funds worth Rs 2.5 lakh crore.

Finance Minister P Chidambaram had already asked the central PSUs to invest their surplus cash or lose it.

"We have already put (PSUs) on notice, no one will be allowed to fall short of the announced intention to Invest, If they have not invested and they still have surplus cash, they have been told to invest the principle is use it or lose it," Mr Chidambaram had said in November.

At the beginning of the financial year, each central PSU had committed to invest a certain amount. Grappling with fiscal constraints, the Finance Ministry last month had said there was a necessity to curb rush of expenditure in the last quarter of the year, particularly in the month of March, and restricted the expenditure in the last quarter of current financial year.

The government had hiked the fiscal deficit target for the current fiscal year to 5.3 per cent of GDP, up from 5.1 per cent estimated in Budget. The rising subsidy bill and lower-than-expected revenue realisation have put pressure on government finances in the ongoing fiscal year.

During the April-December period, direct tax collection grew by eight per cent, against the annual target of 15 per cent as envisaged in the Budget.