Rs 1,500 crore PSU fund on the cards

RUN-UP TO BUDGET 2005/ Fund to be used for revitalising 39 firms

The government is likely to set up a fund for the revitalisation of public sector companies. The finance ministry is considering allocating Rs 1,500 crore as seed capital for the fund.

According to a proposal by the heavy industry ministry, the fund will be used for strengthening 39 out of the 48 public sector companies under its purview.

It has also sought that the liabilities of sick companies, amounting to Rs 1,500 crore, be written-off.

The revival cases, which will be cleared by the Board of Reconstruction for Public Sector Enterprises, will be financed through the fund.

"The money sanctioned from the fund will be provided on a merit. Resources will be provided only when a firm case is made for the revival of a particular PSU. No money will flow for testing whether a particular company can be revived or not," sources said.

The total expenditure for the heavy industry ministry in 2004-05 stood at Rs 631 crore, of which Rs 471.13 crore were capital expenditure. The central Plan outlay stood at Rs 384 crore, including a budgetary support amounting to Rs 131 crore.

Booster dose

Lined up for revival

The proposed fund will be used for strengthening 39 out of the 48 public sector companies under the heavy industry ministry's purview

Writing off debt

The ministry has also sought that liablities of sick companies amounting to Rs 1,500 crore be written-off

Only genuine cases

Revival cases cleared by the Board of Reconstruction for Public Sector Enterprises will be financed through the fund and a separate head will be created for the purpose