It is time to re -evaluate the utility of units in the public sector

Copyright © HT Digital Streams Limit all rights reserved. Opinion Mint Editors 2 Min Min Leading 29 Apr 2025, 07:30 AM is a step-up in PSU Capex would produce a multiplier effect on the revenue in areas where the government’s own Kapex has had little effect so far. (AFP) Summary state -owned enterprises, once the victims of Dogma, appeared to be good for the fiscal health of the government. Giving them greater space for Capeex can now help widen the Indian industry. The public sector units (PSUs), unlike the perception of being anachronistic remnants, often serve a critical role in the economy, such as the Indian fiscal data. It is perhaps time to jettison that survived their utility and is useful to utilize what exists, rather than stacking all our chips on a borrowed idea. Apathy to PSUs was sown during the Thatcher-Reagan era, when a transatlantic ideological convergence focused on reducing the state’s direct or indirect presence in various sectors, but mostly in the industry. The role of the state’s role was encouraged by the collapse of the Berlin Wall in 1989 and the exposition of the Soviet Union in 1991, with globalization a power that tried to relax the state’s control over the most important parts of the economy. India has also bought this global trend, although part of a market embrace that is brought through a balance between payment crisis. Since then, there have been often questions about the utility of PSUs. Also read: Learning from LIC must lead the PSU sales sellers. It seems that PSUs do have some useful, such as raising the finances of the center with major dividend payouts each year. Add the dividends of the Reserve Bank of India (RBI) to the central suitcases and the government’s expenditure plans are given a significant bone. The total dividend receipts of all PSU’s-including banks in the public sector, financial institutions and RBI-IS budgeted to increase 55% during the previous year during 2024-25. Reports now indicate that the final dividend expenditure of PSUs can be much higher than that, which increases the government’s fiscal position. The trend is likely to continue even in 2025-26, with PSUs back on the plate. Rising dividend yields and payments of state units owned by the state would have even given the center an incentive to delay the download of PSU equity. This year’s budget even dropped its disinvestment goal as a separate line item. Of course, the public sector is not an agreement with the private sector on efficiency, disinvestment remains a worthy goal and there are many PSUs that should undergo sales of interest; A dogma that was overturned would still be dogma. However, the Coffer Filling Mission of PSUs has been in the works for a while. Also read: ‘Center, State CPSe Capex could fall in FY25’ ‘A 2016 memo from the budget division of the finance ministry says that PSUs have to pay 30% of their profits after tax, or 30% of government equity, which is higher. Oddly enough, it also reads that PSUs must use Marklenings fully or in part for their capital investment requirements, in accordance with the recommendation of the 14th Finance Commission that a PSU should deplete all its options for raising additional debt before transferring profits to reserve for the purpose. It may have suited the Indian economy a decade ago. But today, PSU Capex can achieve much more, as an important challenge is to stimulate private investments, create jobs and encourage the demand for consumption. Typically, PSU capital expenditure supports a wide part of medium, small and mini units in different value chains. A step-up in PSU Capex would generate a multiplier effect on revenue in areas where the government’s own Capeex has had little effect so far. Also read: Power Play: Can Coal India face the windwinds? Here’s even a climate. For example, take coal India, for example among the highest dividend payers. It can use a part of the go out for green investments to reduce its carbon footprint and protect itself. It is across the PSU universe, which includes other fossil fuel companies, it can move the needle significantly on the vegetables of the Indian industry. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #PSU Funds #Fiskale Deficiency #Capex Spend Coin Specials