Higher infrastructure spend sought

ECONOMIC SURVEY 2003-04/ PUBLIC SECTOR POLICY

While calling for increased public sector spending to step up investment in the economy, the government on Wednesday said higher investment could not be attained in the absence of fiscal consolidation.

To achieve the 8 per cent economic growth target envisaged in the Tenth Plan, investment flows need to be stepped up from 24.4 per cent in 2002 to 32.3 per cent by 2007.

"Of the 7.9 percentage point increase in the investment rate envisaged in the Plan, 2.6 per cent would have to come from the public sector," the Economic Survey, tabled in Parliament on Wednesday, said.

This means the government will focus more on investments in the social sector than in public sector companies for their revival and expansion.

The Survey, however, reiterated the proposal of the United Progressive Alliance government to devolve full managerial autonomy to successful, profit-making companies operating in a competitive environment. In its Common Minimum Programme, the government had also proposed modernisation and revival of sick public sector entities.

The finance ministry is toying with the idea of granting greater flexibility to Navratna and mini-Ratna public sector undertakings (PSUs) as part of a strategy to step up the investment flow in the economy and bolster the industrial sector. The power ministry has also proposed fast-track clearances for central PSUs investing in hydro-electric generation.

Till March 31, 2003, the Centre had pumped in Rs 146,102 crore or 44 per cent of the total investment of Rs 333,475 crore in the 240 central PSUs.

Banks and financial institutions, which had invested Rs 118,920 crore, were the second largest investors. Investments in PSUs has been increasing steadily from Rs 29 crore in five enterprises in 1951 to Rs 324,614 crore at the end of the Ninth Plan on March 2002.

The 240 PSUs, of which 145 are engaged in manufacturing activities, posted a net profit of Rs 32,141 crore during 2002-03, 23.72 per cent higher than 2001-02, according to the latest Public Enterprises Survey.

The turnover of these PSUs increased 13.71 per cent to Rs 544,390 crore in 2002-03. The top 10 PSUs comprising the state-owned oil companies, Food Corporation of India, Bharat Sanchar Nigam Ltd, Sail and National Thermal Power Corporation, however, accounted for nearly 70 per cent or Rs 378,589 crore of the turnover of the 240 PSUs.