Department of Public Enterprises (DPE) will move a Cabinet note by this month-end on finalising norms for investment of surplus funds with cash-rich state- owned firms such as ONGC, Coal India, Bhel and SAIl.
The move is aimed at boosting investments and promoting the country’s economic growth against the backdrop of high fiscal deficit facing the government. Surplus funds of cash- rich Central Public Sector Enterprises (CPSEs) are estimated to be around Rs 2.8 lakh crore. “The process of inter-ministerial consultations is on and we expect to send the note to the Cabinet Committee on Economic Affairs for its consideration by the end of this month,” a DPE official told the news agency.
In 2012, the government had formed a committee of the DPE to review guidelines on investment of excess funds available with these PSUs. The panel, in its draft report, had suggested various investment options including mutual funds, term deposits, treasury bills and government securities for PSUs, the official said. “One of the suggestions made by the committee was to allow CPSEs to park their surplus funds in private sector mutual funds. Currently, CPSEs are allowed to park their funds only in public sector mutual funds,” he said.
This would give some flexibility to PSUs and provide them level-playing field vis-a-vis private companies. Besides, the panel proposed that PSUs should invite bids from banks for parking their surplus funds. At present, CPSEs park their funds with whom they have regular business. “This will help these companies get better returns on their funds,” the official said. At present, there are a number of guidelines issued by the DPE in regard to investment by CPSEs.