The Hindu Business Line : Govt expects liberal dividends from PSUs

WHILE the Centre has initiated a series of austerity measures to cut down expenditure, it expects to mop up additional resources with generous payouts by the profit-making PSUs by way of dividends and special dividends. It also wants PSUs with large cash reserves and sustainable profitability to come out with bonus issues.

These measures are expected to benefit the Government since it is the majority stakeholder in the PSUs.

An order issued recently by the Department of Expenditure said all profit-making PSUs that are essentially commercial enterprises would declare a minimum dividend of 20 per cent or a minimum dividend payout of 20 per cent of post-tax profits, whichever is higher. In respect of oil, petroleum, chemical and other infrastructure sectors, this amount would be 30 per cent. Also, PSUs with large cash surpluses and without firm plans for reinvestment have been directed to declare special dividends.

The order said PSUs having large cash/free reserves and sustainable profitability would issue bonus shares and those with high market price of shares would consider stock splits.

Profit-making joint ventures would also normally give a minimum dividend of 20-30 per cent depending on the sector as mentioned above.

It said other non-tax receipts, including applicable user charges, would be collected in full and also be reviewed to aim at recovering at least the cost of the service.

Timely repayment of loans provided by the government to the PSUs and due payment of fees/charges on government guarantees would be ensured by effective monitoring.

Austerity measures

As part of efforts aimed at fiscal prudence and to rein in expenditure, the Union Finance Ministry has clamped an immediate ban on creation of new posts and on purchase of new vehicles.

It has also imposed a total ban on foreign travel by officials for study tours, seminars, workshops etc., funded by the Central Government except for annual and other formal meetings of bilateral/multilateral bodies.

The order issued by the Department of Expenditure said expenditure on office maintenance, foreign travel, overtime allowance/honorarium, hiring of vehicles, telephone, fuel charges and seminars/conferences would be restricted during 2005-06 to average of actual expenditure incurred during 2002-03, 2003-04 and 2004-05 and no re-appropriation of funds to augment these expenses would be allowed during the current year.

The order drew attention to the instructions of the Cabinet Secretariat on September 14 on foreign travel by officials and said the norms particularly relating to number and purpose of visits should be strictly adhered to. From now, air travel for official purpose on airlines other than by Air India/Indian Airlines would be permitted provided they offer more competitive airfare.

The order said purchase of new vehicles is banned until further orders and exceptions would be allowed only in unavoidable cases, including for meeting the operational requirements of Defence Forces and Central Para Military Forces, with prior concurrence of the Department of Expenditure.

There would be a ban on creation of new posts in all Ministries/departments/autonomous institutions till further orders and any proposal for creation of new posts should be referred to the Ministry for clearance. Outsourcing of routine services such as cleaning, maintenance and moving papers/dak might be encouraged.

It called upon all ministries and departments to take up a review of all the posts that have remained vacant for more than six months in consultation with the Finance Ministry so as to identify posts that could be abolished. These reviews must be completed by March 31, 2006 and till it is completed, no posts lying vacant for more than six months should be filled up except with the prior approval.

There would be a review of transfer policies since frequent transfers cause avoidable instability and all ministriesshould review the policies with a view to ensuring longer tenures at posting, thus reducing expenses.

The order made it clear that no amount will be released to any entity (including State governments), which has defaulted in furnishing utilisation certificates for grants-in-aid released by the Centre in the past without clearance from the Finance Ministry.

In respect of all grants released prior to April 1, 2004, two months notice might be given to furnish the certificates failing which the amount would be deducted from future releases.

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