Economy

Govt to PSUs: Invest as claimed or face music

Shishir Sinha New Delhi | Updated on November 15, 2017 Published on January 13, 2012

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BUY-BACK BLUES





Upset by public sector undertakings backing out of the Government-mooted share buy-back plan on the grounds that their cash reserves would be needed for investments, the Centre has decided to hold them strictly to account on that front.

PSUs will now have to ensure that investments promised in order to avoid share buy-back or cross-holding buying are actually carried out to plan.

Now, failure to implement planned investments on schedule will not only affect the unit's ratings, but also the prospects of the chairman concerned, PSUs have been warned.

PSUs not playing ball had put a spanner in the Government's plans to bridge its fiscal deficit. The Prime Minister's Office read out the riot act to major Central PSUs when it reviewed their investment plans on January 3, highly placed sources said. The meeting was chaired by Mr Pulok Chatterjee , Principal Secretary, PMO, and was attended by 17 major PSUs such as ONGC, NTPC, SAIL, Coal India beside others.

Seventeen major central PSUs plan to invest over Rs 1.76-lakh crore during 2012-13, of which Rs 1.41-lakh crore will be in the domestic market. The Government wants PSUs to invest more in order to “provide stimulus to the economy.”

At the meeting, it was decided to build the investment plans provided by the PSUs into their Memorandums of Understanding (MoUs), “so that they can be suitably apprised as a part of the MoU.” The Department of Public Enterprises (DPE) monitors the implementation of the MoUs.

A senior DPE official said that there is at present flexibility about mentioning investments in the MoU, which means that any plan outside the memorandum is not a binding commitment.

This system was first introduced in 1986 as result of the recommendations of the Arjun Sengupta Committee. It is a negotiated document between the Government and the PSU management specifying the objectives of the agreement and the obligations of both the parties.

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Published on January 13, 2012
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