Govt to consult Sebi on PSU surplus fund investment

"Public Sector Units (PSUs) need to make gainful investment, particularly in government projects, as the country is facing high fiscal deficit. Also, the government is relying on surplus-cash available with PSUs to stimulate the economic activity," sources told PTI.

A committee of the Department of Public Enterprises (DPE), headed by Department of Economic Affairs Additional Secretary Shaktikanta Das, has been constituted to review the guidelines on investment of excess cash available with state-owned units.

The panel is in the process of forming a consensus in this regard and we will soon consult SEBI as well, sources said.

"Given the current economic scenario, there is a need to come out with one set of comprehensive guidelines to impart PSUs some flexibility to invest their surplus money as it will also contribute to the country's growth," they added.

At present, there are number of guidelines issued by the DPE in regard to investment by PSUs.

Besides, the Reserve Bank has been consulted and it suggested to the panel various investment options such as mutual funds and government securities wherein PSUs can invest their money.

The excess cash available with about 20 CPSEs, including PFC, BHEL, ONGC and NTPC is estimated at about Rs 1.2 lakh crore, is mostly deposited in banks and earns interest at the rate card.

The government wants that these units should invest their funds, mainly in infrastructure sector, to promote growth and bring down the country's fiscal deficit to 5.1 per cent in the current fiscal.

India's Gross Domestic Product (GDP) growth rate touched a nine-year low of 6.5 per cent in 2011-12 and its fiscal deficit ballooned to 5.9 per cent during the same period.

In January this year, the Prime Minister's office (PMO) has directed cash-rich PSUs to go for investments to the tune of over over Rs 1.2 lakh crore mainly in infrastructure sector which would act as a stimulus in the 2012-13 fiscal.

The country's infrastructure sector needs over USD 1 trillion in the next five years. The government has said it alone cannot make such a huge investment, therefore, importance is being given to public-private partnership.