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MoF asks big PSUs to pursue investment plans aggressively

P Vaidyanathan Iyer

As the second part of its expenditure overdrive, the finance ministry is asking all big PSUs to aggressively pursue their investment plans by not only raising funds from the market but by even dipping into their reserves.

The ministry's directive comes close on the heels of a call by Finance Minister Yashwant Sinha to his colleagues in various ministries to step up expenditure in June. Sinha had, in fact, promised additional funds to ministries for productive expenditure if they exhaust their budgeted limits.

Sinha's fiscal strategy for 2001-02 largely involves pump-priming the economy by pushing for an expenditure-led growth. In his parleys with the agriculture, steel, railways, fertilisers, textiles and urban development ministries, he had told them to start spending right away instead of bunching their expenditure in the last quarter of the year.

A senior finance ministry official told Business Standard, "We plan to direct the public sector undertakings to clear all backlog projects by expediting the pace of investments."

The PSUs have traditionally been the major investment drivers of the economy, but in the wake of the divestment plans in the 90s, most of them had put their investment plans on the back burner.

The push by the finance ministry now turns the wheel almost full circle to a period of public investment-led growth phase for the Indian economy.

The ministry will be accordingly asking PSUs like National Thermal Power Corporation, Powergrid, National Highways Authority of India Ltd and National Hydro-Electric Power Corporation amongst others to start investing at the earliest.

Many of these corporations meet their annual plans mainly from their internal and extra-budgetary resources, which comprises internal accruals and raising funds either through bonds, external commercial borrowings or suppliers credit. "The budgetary support for most of these PSUs is not heavy," the official pointed out.

For instance, NTPC's budgetary support for the current fiscal is nil. Its investment plan is to be met by raising Rs 14.50 billion through bonds or debentures, Rs 6.23 billion via external commercial borrowings and Rs 9.33 billion from internal resources.

The finance ministry wants NTPC to go ahead with its fund-raising and investment plans at the earliest. Similar is the case with NHAI. Of the total plan outlay of Rs 58.10 billion, budgetary support is limited to the extent of Rs 22 billion.

The balance Rs 36 billion is to be raised via bonds or debentures. Powergrid and NHPC also plan to raise Rs 13 billion and Rs 1.22 billion respectively from the market this year.

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