Terms Set To Release Funds For Sick Psus

The Union cabinet has been releasing a large part of the over Rs 1,000 crore revival package for sick PSUs on the condition that these units would either be put up for sale or would invite joint venture partners at the end of two years.

Government sources said the release of the assistance was subject to the condition that the venture would either be put for sale or would invite joint venture partners at the end of two years. The idea is to revive such units to make it attractive enough for outright takeovers or for joint ventures. If these units are shut down, there will be no takers for them, the sources said.

 

For example, the recent clearance of the revival package for Hindustan Photo Films where Rs 25 crore was released towards working capital needs and other commitments to enable the company to carry out commercial operations for the next two years.

The United Front government had come in for criticism for releasing a large quantum of funds directly through write-offs for units which are only worth winding up.

The spate of revival plans cleared by the government are also being seen as a move to appease the Left parties and trade unions. The sources, however, said the revival packages were being cleared primarily with the intent of readying these units for sale.

The government is required to pay wages even if the units are closed down. This is because the definition of state includes PSUs, and since the state cannot go bankrupt, the wage has to be paid, sources said quoting the example of Bengal Potteries where the government continued to pay salaries though the company had been shut down for close to two decades.