Govt's austerity drive poised to exceed target

The government's austerity drive may yield more that it aims to. Though savings of Rs 2,000 crore have been targeted, the 20 per cent dividend payout by public sector enterprises (PSEs) may alone yield more than Rs 4,000 crore.

Officials at the ministry of heavy industries said 20 per cent of the dividend from all profit-making PSEs would alone amount to Rs 4,000 crore.

According to the Public Enterprises Survey 2002-03, of the 240 PSEs, 63 are making profits. The total dividend payout by PSEs was Rs 12,170 crore in 2002-03. Thus, the yield from dividends may be around Rs 4,000 crore.

Under the austerity measures announced by the government, all profit-making PSEs are to declare a minimum dividend on equity of 20 per cent or a minimum dividend payout of 20 per cent of post-tax profits, whichever is higher. However, oil, petroleum, chemical and other infrastructure sectors will have to declare a minimum post-tax profits of 30 per cent.

Further, all profit making companies must consider issuing bonus shares to the government under the austerity measure drive. Officials said the boards of the companies had already been intimated about it, since the companies were into the second half of the financial year.

All profit-making joint venture companies will be asked to make efforts to give a dividend of 20 per cent on government equity holding. "Companies will eventually fall into line," an official said.

The ministry of heavy industries is the nodal ministry for implementing the measures across all profit-making PSEs. Secretaries of various ministries overseeing PSEs have also been asked to initiate the process. Several PSEs like BHEL, had already initiated the measure, the official said.

However, sources said the austerity measures might not translate into savings on the ground, since both Plan and non-Plan expenditures had already been "pruned to the bone".

The measures shall take effect from October 1, 2004.