Fin­min Wants CPSEs to Ready Cash­back Of­fers Cos sit­ting on idle cash with no capex plans told to con­sider spe­cial div­i­dends of 15-100% or even share buy­backs

The Economic Times - - Front Page - Deepshikha.Sikar­war @times­group.com

New Delhi: Cen­tral gov­ern­ment-owned com­pa­nies sit­ting on idle cash have been asked to part with it if they have no im­me­di­ate cap­i­tal ex­pen­di­ture plans as the ex­che­quer looks to raise funds to meet a likely short­fall in rev­enue. Such cen­tral pub­lic sec­tor en­ter­prises (CPSEs) have been asked to con­sider spe­cial div­i­dends of 15100% or even share buy­backs.

The fi­nance min­istry has told no­dal min­istries and de­part­ments to pass on the clear mes­sage that com­pa­nies can­not have large cash re­serves while the gov­ern­ment is forced to bor­row to fund other pro­grammes.

“PSUs (pub­lic sec­tor units) have to spend… If they do not have any im­me­di­ate plan to in­vest, then the money can be used for other pro­grammes,” said a gov­ern­ment of­fi­cial.

PSUs have also been told to look at av­enues other than the gov­ern­ment to fund their plans such as mon­eti­sa­tion of as­sets.

Such a drive could re­sult in the gen­er­a­tion of re­sources in ex­cess of the Rs 67,500 crore div­i­dends bud­geted from all sta­te­owned com­pa­nies for the fis­cal year end­ing March 2018.

Apart from this, the gov­ern­ment is also talk­ing to the Re­serve Bank of In­dia about con­sid­er­ing an ex­tra div­i­dend, over and above the Rs 30,659 crore it paid out in the last fis­cal year. The RBI’s fi­nan­cial year runs from July to June. The gov­ern­ment had pegged a div­i­dend of Rs 58,000 crore from the RBI and pub­lic sec­tor banks in the year to June 2017, but the cen­tral bank’s pay­out was 53% down from Rs 65,876 in the pre­vi­ous year, ow­ing to var­i­ous costs. No div­i­dend was ex­pected from pub­lic sec­tor banks that are them­selves un­der stress as they try to clean up their loan books.

State-run com­pa­nies had cash and bank bal­ances of Rs 2.43 lakh crore at the end of March 31, 2016, down from Rs 2.63 lakh crore in the year ear­lier be­cause of steep div­i­dends and share buy­backs in the last two years.

The gov­ern­ment’s April-Au­gust fis­cal deficit touched 96.1% of that for the full year af­ter it front­loaded ex­pen­di­ture fol­low­ing the early pre­sen­ta­tion of the an­nual bud­get on Fe­bru­ary 1.

This cou­pled with lower-than-ex­pected rev­enues from the auc­tion of tele­com spec­trum could pose some pres­sure on the gov­ern­ment’s fis­cal math as the goods and ser­vices tax (GST) that was rolled out in July sta­bilises. To be sure, the gov­ern­ment is con­fi­dent of meet­ing the fis­cal deficit tar­get of 3.2% of GDP in FY18.

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