Budget may see Rs 200 cr fund for PSEs revamp

RUN UP TO BUDGET 2006

In a bid to assuage the Left parties, the government is expected to allocate around Rs 200 crore for the restructuring of public sector enterprises in the forthcoming Budget.

The government move is expected to provide some relief to its political managers who have been facing the wrath of the Left over the opening up of the single brand retail trade sector to Foreign Direct Investment (FDI).

The government had in the current fiscal allocated a token sum of Rs 1 crore towards the lumpsum provision for restructuring of PSEs. The upgrade of this fund is directly related to the government's efforts to ease the Left's stance on issues which they have been opposing, like labour reforms and the long delayed Pension Fund Regulatory Development Authority.

Senior government officials told Business Standard that while the Department of Heavy Industries had sought around Rs 400-500 crore for the purpose, the Finance Ministry was likely to allocate around Rs 150 crore to Rs 200 crore.

The allocation for restructuring of the PSEs is expected to be over and above the entitlement under the National Investment Fund (NIF) to use 25 per cent of the interest earned on the corpus for revival of viable PSEs.

Officials said that the government would make a separate allocation for PSUs since the provision of making a token allocation for the current fiscal had not worked very well.

"At the time of the Budget last year, it was decided that a token provision would be made which would be enhanced as and when a restructuring package was approved. However, the process to obtain funds takes a lot of time," an official said.

Out of the 230 operating Central Public Sector Enterprises, as on March 2004, 88 had incurred a loss of Rs 8399 crore while 70 were registered with the Board for Industrial and Financial Reconstruction.