The UPA government wants to use public sector enterprises to finance some of its social welfare programmes. The department of public enterprises believes the unusual plan will generate about Rs 2,000 crore every year, to finance schemes under the Right to Education Act and the proposed Right to Food Act.
Arun Yadav, minister of state for heavy industries and public enterprises confirmed to a business daily that the plan was considered by his department at a review meeting of central public sector enterprises.
The plan will broadly involve asking profitable public sector companies to set aside a graded percentage of their profits to bankroll the schemes. The sum will only be about 1.6 per cent of the total spend of Rs 1,25,372 crore earmarked by the Centre for the social sector in 2010-11. But given the budgetary constraints faced by the Centre, any such support will be welcome.
This is the first time the government is attempting to dip into the profits of these companies by specifically asking for a designated sum to be set aside. Since many of these companies are now listed, the decision by the department of public enterprises will have to be ratified by shareholders at the annual general meeting of each company before the government decision can sail through.
The plan notes that the money will come under the head of corporate social responsibility for public sector enterprises. The framework will specify that enterprises with profit margin below Rs 100 crore will have to allocate 3-5 per cent of the same for the purpose. Those with profit of Rs 101 crore to Rs 500 crore will have to allocate 2-3 per cent, while those with profits in excess of Rs 500 crore will have to allocate 0.5-2 per cent.
Public sector enterprises paying dividends are some of the biggest sources of non-tax revenues for the government. If these entities are now corralled to pay hefty sums to finance social sector projects, it will correspondingly reduce the dividends they can pay the finance ministry.
The meeting to review the performance of public sector companies was attended by top officials from the department of heavy industries, representatives of the companies and other officials.
Arun Yadav, minister of state for heavy industries and public enterprises confirmed to a business daily that the plan was considered by his department at a review meeting of central public sector enterprises.
The plan will broadly involve asking profitable public sector companies to set aside a graded percentage of their profits to bankroll the schemes. The sum will only be about 1.6 per cent of the total spend of Rs 1,25,372 crore earmarked by the Centre for the social sector in 2010-11. But given the budgetary constraints faced by the Centre, any such support will be welcome.
This is the first time the government is attempting to dip into the profits of these companies by specifically asking for a designated sum to be set aside. Since many of these companies are now listed, the decision by the department of public enterprises will have to be ratified by shareholders at the annual general meeting of each company before the government decision can sail through.
The plan notes that the money will come under the head of corporate social responsibility for public sector enterprises. The framework will specify that enterprises with profit margin below Rs 100 crore will have to allocate 3-5 per cent of the same for the purpose. Those with profit of Rs 101 crore to Rs 500 crore will have to allocate 2-3 per cent, while those with profits in excess of Rs 500 crore will have to allocate 0.5-2 per cent.
Public sector enterprises paying dividends are some of the biggest sources of non-tax revenues for the government. If these entities are now corralled to pay hefty sums to finance social sector projects, it will correspondingly reduce the dividends they can pay the finance ministry.
The meeting to review the performance of public sector companies was attended by top officials from the department of heavy industries, representatives of the companies and other officials.
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