 "Note to CCEA on norms for investing surplus PSU funds this mth")
The move is aimed at boosting investments and promoting the country's economic growth against the backdrop of high fiscal deficit facing the government. Surplus funds of cash- rich Central Public Sector Enterprises (CPSEs) are estimated to be around Rs 2.8 lakh crore.
"The process of inter-ministerial consultations is on and we expect to send the note to the Cabinet Committee on Economic Affairs for its consideration by the end of this month," a DPE official told PTI.
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In 2012, the government had formed a committee of the DPE to review guidelines on investment of excess funds available with these PSUs.
The panel, in its draft report, had suggested various investment options including mutual funds, term deposits, treasury bills and government securities for PSUs, the official said.
"One of the suggestions made by the committee was to allow CPSEs to park their surplus funds in private sector mutual funds. Currently, CPSEs are allowed to park their funds only in public sector mutual funds," he said.
This would give some flexibility to PSUs and provide them level-playing field vis-a-vis private companies.
Besides, the panel proposed that PSUs should invite bids from banks for parking their surplus funds. At present, CPSEs park their funds with whom they have regular business.
"This will help these companies get better returns on their funds," the official said.
At present, there are a number of guidelines issued by the DPE in regard to investment by CPSEs.
"Given the current economic scenario, there is a need to come out with one set of comprehensive guidelines to impart some flexibility to CPSEs to invest their surplus money as it will also contribute to country's growth," the official said.
In May, the Prime Minister's Office (PMO) had directed central PSUs to invest their excess funds or pay higher dividend so that they could be deployed elsewhere to fuel growth and create jobs.
The CMDs of cash-rich CPSEs such as NTPC, PGCIL, Oil India, Indian Oil Corporation and NPCIL were present at the meeting.
The PMO has been monitoring capex and investment plans of about 17 major PSUs since last fiscal to enhance investments in the economy by utilising their substantial cash surpluses.
During 2012-13, the country's fiscal deficit stood at 4.9% to the Gross Domestic Product. The government aims to contain fiscal deficit at 4.8% of GDP this fiscal.
Meanwhile, the Indian economy grew by 4.8% in the second quarter (July-September) of 2013-14 fiscal. The Reserve Bank has scaled down the growth forecast for the current fiscal to 5%, from the earlier projection of 5.5%, citing downside risk stemming from domestic constraints.
The country's GDP slipped to a decade-low of 5% in 2012-13 fiscal.