Though the government has threatened to take away their R2+ lakh crore of cash if central PSUs don’t increase their investments, the story is a lot more nuanced. Indeed, the Prime Minister agreeing to set up a Committee of Secretaries to look into the woes of PSUs is recognition of the role of the government in holding back PSU investments. ONGC never had an offshore chief for 242 days in 2012 and didn’t have an overall chief for 245 days in 2011—a three-year delay in getting permissions for its KG Basin field, similarly, held back what’s likely to be a $5 billion investment over 10-15 years. In fact, as our page 1 story shows, not all PSUs who have cash are doing nothing with it. ONGC may have had R28,768 crore of cash some months ago, but it invests more than that each year, and this is to be hiked dramatically over the next few years. NTPC’s FY13 investments, similarly, are more than the cash balances it has, and this has to be hiked in a big way since the power producer will now be investing in developing captive mines. This is not to say there are no PSUs with more cash than investment plans, Coal India being the prime example, with enough cash to fund 10-12 years of investments at current levels. But with the PSU saying it has plans to buy overseas assets, that’s a claim which needs to be tested. Shareholders have the right to demand back cash from firms they own, and the government is no exception, but it needs to take a close look at the genuine needs of PSUs.
More than that, the government needs to take a good hard look at PSUs and decide whether it wants to keep them. Air India is an obvious example where R30,000 crore is to be spent without any clear sign that it can be revived; MTNL and BSNL, similarly, have been making huge losses with subscribers deserting them—even in rural areas—for private players. The two need R10,000 crore just to pay for their ‘extra’ spectrum, have surrendered their BWA spectrum and don’t have the funds to invest to utilise their 3G spectrum either. So while the government can get some extra money by making PSUs like Coal India give them a special dividend, this becomes largely irrelevant if larger sums have to be forked out to keep other PSUs going.