• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Shaji Vikraman
Hema Ramakrishnan

NEW DELHI, Feb. 3

STATE-OWNED companies are lending a helping hand to the Centre to narrow its massive revenue shortfall.

After contributing substantially in the form of higher dividends, following the lead given by the Reserve Bank of India (RBI) and Videsh Sanchar Nigam Ltd (VSNL), some of the Central PSUs have pre-paid the loans they had taken from the Centre.

The receipts of Rs 2,000 crore from these payments and anticipated capital receipts of close to Rs 3,000 crore from a couple of PSUs which have sought approval for pre-paying their multilateral loans could help the government in a modest way to bridge the shortfall in tax collection and disinvestment receipts, according to officials.

Considering the government's huge fiscal deficit, these receipts will at the most help pare the deficit by a modest amount.

The PSUs have pre-paid the loans contracted a few years ago from the government at over 14 per cent by raising funds from the market at fine rates. However, unlike in the case of dividend payment, where several PSUs were virtually arm-twisted to pay up higher amounts, there has not been any element of coercion on the issue of pre-payment of loans.

Under the existing practice, the Centre contracts the loans from multilateral funding agencies and on-lends it to the PSUs. The proposal to allow PSUs to pre-pay their multilateral borrowings is now being vetted by the Department of Economic Affairs (DEA), given that several PSUs are in a position to swap high-cost loans with cheaper debt. The proposal, if cleared, would be a trendsetter, said officials.

The massive tax shortfall is, in fact, partly set to be bridged through higher realisation from non-tax revenues this time around. The Centre has budgeted a realisation of Rs 68,714 crore from non-tax revenues during fiscal 2001-02 as against the revised estimate of Rs 61,763 crore for 2000-01, marking an increase of over 11 per cent.

Of the total amount, the cumulative dividends and profits - from PSUs and dividend or surplus profit of the RBI, nationalised banks and other financial insitutions - is budgeted at Rs 16,229 crore for the current fiscal. Interest receipts have been projected at Rs 41,578 crore.

The RBI paid Rs 9,350 crore as dividend this year, which was nearly Rs 3,000 crore higher than the Finance Ministry's internal estimate. VSNL also forked out close to Rs 2,250 crore by way of dividend and dividend tax to the Centre.

The realisation from non-tax revenues stood around Rs 47,694 crore up to the end of December 2001 as compared to Rs 41,086 crore up to December 2000, marking a 16-per cent increase. The collections amounted to 69 per cent of the budgeted amount for the current fiscal.

Send this article to Friends by E-Mail

Stories in this Section
Dumping duty may lead to PSF price hike: SIMA

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line