GoM differs over PSU preference

"Some members of the GoM are against the extension of the policy while some are in favour," official sources said.

The nodal ministry for framing policies for central PSEs, the Ministry of Heavy Industries and Public Enterprises, favours a five-year extension. The officials, however, said if the policy is extended, it would be for a short time and with a few changes.

Today the GoM met for an hour under the chairmanship of Finance Minister P Chidambaram to discuss the issue of extension of the policy. "We heard everyone's views. We will meet again," Chidambaram said after the meeting. "The decision on the extension of the scheme will be taken by consensus," Heavy Industry Minister Santosh Mohan Deb added.

The policy has seen numerous extensions in the past. After it expired on March 31, 2004, the new government, which assumed office in May, took almost six months to decide whether it should be extended.

After much discussion it was decided by the Cabinet to extend the scheme till March 31, 2005. While extending the policy for another year, the Cabinet had concluded that a GoM will take a decision on its future extensions.

The GoM meeting today was attended by Power Minister PM Sayeed, Petroleum Minister Mani Shankar Aiyar, Santosh Mohan Deb and Deputy Chairman of Planning Commission Montek Singh Ahluwalia.

The policy grants preference to the central PSEs in government contracts at lowest valid price bid, if the price quoted by it is within 10 per cent of the lowest price. The preference is extended only to tenders of Rs 5 crore and above.

The central PSUs registered under the Companies Act 1956 and statutory central PSEs are eligible for the scheme. It is also extended to joint venture companies, where the holding of the government and/or PSUs is 51 per cent or more, and joint ventures which are subsidiaries of PSUs and in which the PSUs hold at least 51 per cent shares.

A minimum value addition of 20 per cent by the central PSUs or joint venture units by way of manufacturing and services is a prerequisite for availing of purchase preference.

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Stalemate

The Policy: The purchase preference policy grants preference to central PSEs in government contracts, if the price quoted by it is within 10 per cent of the lowest price.

The Aye: The Ministry of Heavy Industry favours a five-year extension with a few changes. But it seeks consensus.

The others: The GoM comprises Power Minister PM Sayeed, Petroleum Minister Mani Shankar Aiyar, Heavy Industries Minister Santosh Mohan Deb and Planning Commission Deputy Chairman Montek Singh Ahluwalia