Excess PSU funds to be used for infrastructure development

NEW DELHI: The government is considering a plan to use surplus cash with state-run firms for infrastructure development. The National Manufacturing Competitiveness Council or NMCC has suggested that such money be parked in the National Investment Fund (NIF) and used for this purpose.

State-run companies should confine themselves to their main areas of business and not enter “areas which do not make any business and management sense”, NMCC said in its letter to the Prime Minister’s Office and some key administrative ministries, including the finance ministry NMCC has suggested that the NIF money be used for developing critical sectors such as aviation, nuclear power and railways, according to a government official aware of the development.

“Our comments have been sought. Any final shape to NMCC’s proposal will come only after discussions with PSUs (public sector units) and their respective administrative ministries,” the official said.


Last month, the Prime Minister’s Office stated that at the end of the first quarter of the fiscal year, 23 state-run firms had achieved 94 per cent of their capital expenditure target. The PMO has been reviewing the capital expenditure of these companies. The state-run companies have surplus cash of more than Rs 3 lakh crore. The government has been keen to push them into executing projects and investing in expansion. The capital expenditure target set for the 23 state-run companies mentioned above this fiscal is Rs 1.41 lakh crore.

NMCC cited examples such as Steel Authority of India developing fertiliser plants, a hydro power company setting up a coal-based power plant, and NMDC working on a steel plant. “It seems that in order to achieve their capital expenditure targets PSUs are venturing into areas which are not related to even their ancillary operations,” said another government official, requesting anonymity.

The Prime Minister’s Office is monitoring the capital expenditure plans of state-run companies, and has directed administrative ministries to seek reports on the actual deliverables of the these companies on a quarterly basis. The companies are of the opinion that diversifying operations acts as a hedge against business risk and provides an avenue for growth.