CPSEs asked to draw up plans to monetise assets

NEW DELHI: In a bid to drive investment in the economy and prod state-run firms for capital expansion, the government has asked central public sector enterprises ( CPSEs) to work out their plans for monetizing their assets.

A senior government official said that CPSEs will also look at strategies to offload stakes in the subsidiaries and joint ventures as part of this exercise. According to government data, there are 63 subsidiary companies of CPSEs which are yet to start regular production.

“The administrative ministries are in dialogue with their companies. Already, some power sector firms including Power Grid Corporation are working to set up an infrastructure investment trust (InvIT) to unlock value of their assets,” he said.

An executive with Power Grid Corp confirmed the development and said that the state-run firm will soon appoint consultants to look at monetizing its operational transmission assets.

The above quoted government official said that CPSEs should float new subsidiaries only if they have strategic importance. “If the existing subsidiaries or joint ventures are non-core entities and are not providing better returns than the main unit, companies will do well to offload their stake in them,” he said.

The move comes at a time when the government is looking to push public spending to boost growth to 8% in this fiscal itself. Last week, ET had reported that chief economic adviser Arvind Subramanian may be given charge to work out how much investment would be required to achieve a GDP growth rate of 8% this year and also how this target can be met.

According to Reserve Bank of India (RBI), bank loans grew 9.2% year-on-year in the fortnight ending April 29, the slowest since December last year. In his budget speech, finance minister Arun Jaitley had said that there’s a need to use the assets of CPSEs for generation of resources for investment in new projects.

“We will encourage CPSEs to divest individual assets like land, manufacturing units, etc., to release their asset value for making investment in new projects,” he had said, adding that the NITI Aayog will identify the CPSEs for strategic sale. The government has budgeted.`53,883 crore as dividends from CPSEs this fiscal.

Last year, the government had noted that there were huge variations in dividend paid by CPSEs and there was a need for a clear policy on the matter. It had then asked CPSEs to shell out 30% dividend and raised about Rs 44,000 crore including special dividends.