Govt advised to wean away sick PSUs from budgetary support

By agencies   |   Monday, 13 June 2005, 19:30 IST
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NEW DELHI: The government has been advised to bring down the dependence of sick public sector companies on budgetary resources and instead sell the shares and assets of these companies to raise funds for their revival. "The government should seriously consider to raise finances for reconstruction of PSEs from the market through an Initial Public Offering (IPO) of which government would be a promoter," Parliamentary Committee attached to the Department of Heavy Industry has said in its report. The budgetary resources thus saved could be used for clearing the dues of employees who opt for VRS, the committee has recommended. While the Department of Heavy Industry is of the view that the resources for revival of these PSUs could come from sale of their assets, the committee has advised it caution. "The government should draw a policy of guidelines for all the interested parties and shareholders in this (sale of assets) respect," the committee said. It also said that once the PSUs are listed they would be accountable to the market and shareholders and therefore would be autonomous to a significant extent. The committee said policy of the government should be to provide as minimum a budgetary support as possible. "At the most the government guarantees can be provided to enable PSEs seek funds from banks and financial institutions. Even in revival cases the PSEs should be advised to obtain institutional finance whereever feasible," the committee said while pointing out that of the 34 functioning PSEs under the department 27 are entirely dependent on budgetary support.

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