Consolidation, mergers and acquisitions of CPSEs to be encouraged, an integrated public sector ‘oil major’ soon

Pradhan Mantri Mudra Yojana budget target doubled to Rs. 2.44 lakh crores

Rs. 10,000 crores earmarked for recapitalisation of Banks, Need based additional allocation assured

While presenting the General Budget 2017-18 in Lok Sabha here today, the Union Finance Minister Shri Arun Jaitley has said that the shares of Railway Public Sector Enterprises (PSEs) like IRCTC, IRFC and IRCON will be listed in stock exchanges. The Government will encourage strengthening the CPSEs through consolidation, mergers and acquisitions and soon create an integrated public sector ‘oil major’, he added.
Stating that the Pradhan Mantri Mudra Yojana (PMMY) has proved an overwhelming success in extending funds for the deprived sections, Shri Jaitley doubled the budget target under the scheme to Rs. 2.44 lakh crores.
Easing the stressed legacy accounts of banks, Shri Jaitley earmarked Rs. 10,000 crores for recapitalisation of Banks in 2017-18 and assured need based additional allocation.
Stating that the disinvestment policy announced in the last budget will continue, Shri Jaitley further said that the Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges. This will foster greater public accountability and unlock the true value of these companies, he added.
Shri Jaitley said the CPSEs will be integrated across the value chain of an industry through consolidation, mergers and acquisitions. By these methods it will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders, he added. Possibilities of such restructuring are visible in the oil and gas sector. The Government proposes to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies.
The Finance Minister said that the Exchange Trade Fund (ETF), comprising shares of ten CPSEs, has received overwhelming response in the recent Further Fund Offering (FFO). The Government will continue to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18, he added.
Shri Jaitley said that the focus on resolution of stressed legacy accounts of Banks will continue and the legal framework has been strengthened to facilitate resolution, through the enactment of the Insolvency and Bankruptcy Code and the amendments to the SARFAESI and Debt Recovery Tribunal Acts. In line with the ‘Indradhanush’ roadmap, an amount of Rs. 10,000 crore is provided for recapitalisation of Banks in 2017-18 and additional allocation will be provided, as may be required, he added.
Shri Jaitley said that the Pradhan Mantri Mudra Yojana has contributed significantly to funding the unfunded and the underfunded. He further said that the last year target of Rs.1.22 lakh crores was exceeded and for 2017-18, he proposes to double the lending target of 2015-16 and set it at Rs. 2.44 lakh crores. Priority will be given to Dalits, Tribals, Backward Classes, Minorities and Women, he added.
Shri Jaitley said that the Stand Up India scheme was launched by the Government in April 2016 to support Dalit, Tribal and Women entrepreneurs to set up green field enterprises and become job creators. Over 16,000 new enterprises have come up through this scheme in activities, as diverse as food processing, garments, diagnostic centres, etc, he added.

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The move Marks the Beginning of a Historic Milestone in the form of Institutional Financing for the First time Becoming Available for Railway Projects

Suresh Prabhu : Fresh Investments to Help Decongest the Network, Increase Traffic Output and Generate Adequate Internal Resources

Life Insurance Corporation (LIC), a PSU of Government of India presented the cheque of Rs.2000 crore to Railway PSU Indian Railway Finance Corporation (IRFC) as the first tranche of funding assistance to Railways for its projects. This handing over of cheque was done today i.e. 27.10.2015 at an impressive function at Rail Bhawan in the presence of Ministry of Railways Shri Suresh Prabhakar Prabhu. The cheque was handed over by Shri S.B. Mainak, MD/LIC to Shri Rajiv Dutt, MD/IRFC. On this occasion, Chairman Railway Board Shri A.K. Mital, Financial Commissioner (Railways) & Chairman, IRFC Shri S. Mookerjee; and other Board Members & other Railway and LIC officials were among those present.

It may be recalled that just within fifteen days of presenting the Railway Budget 2015-16, an important commitment of Budget announcement was fulfilled on 11.03.2015 when Railways and LIC signed an MoU for the highest ever funding of Rs. 1.5 lakh crore from LIC to Railways.

Addressing the gathering, Minister for Railways Shri Suresh Prabhakar Prabhu, pointed out that finding resources for investment in capacity enhancement projects was a major challenge for Railways. Without investment, it would not be possible to decongest the network, increase traffic output and generate adequate internal resources. He said that without the fresh investment, the Railways would have gone further down and down and it would not have succeeded in breaking the vicious cycle. The Railway budget 2015-16 had, therefore, envisaged a new source of funds in the form of Institutional Finance. It was a big achievement that within a few days of presenting the budget, the Ministry of Railways signed a Memorandum of Understanding with LIC for funding assistance of Rs.1.5 lakh crore for financing Railway projects over a period of 5 years. As LIC funding will be of 30 year tenor, it matches the Railways’ requirement of long term funds for investment in projects. LIC funds will carry low interest rates tied to Government security, and the cost of funds are expected to come down further over a period of time. Shri Suresh Prabhakar said that an important beginning has been made today with the release of first cheque of LIC funds. It is now for the Railways to match up to the challenge of utilizing the funds in a productive and appropriate manner for realizing maximum benefit. He said that these funds will not only meet the requirement for the new railway projects but will also be utilised for those ongoing projects which will bring quick benefit to the railway system. He said that this arrangement of funds from LIC will be beneficial for both the organizations. Referring to Railway PSU IRFC, Shri Suresh Prabhu said that IRFC has now emerged as an important vehicle for channelizing investment for Railways.

In his speech, MD/LIC Shri Mainak described it as a Golden Day as LIC has found a partner in the Indian Railways which is a viable and sound organization for investing the long term funds available with LIC. MD/LIC offered continued support for Railway projects in future.

The LIC funds are available to the Railways at a rate of 30 bps over the 10-year benchmark yield. The tenor is 30 years with a moratorium of 5 years followed by payment of only interest from year 6 to year 10. From the 11th to the 30th year the loan will be repaid in equated instalments.

Advisor Finance, Railway Board, Shri P.V. Vaidialingam proposed the Vote of Thanks at the end of the programme. Ms. Namita Mehrotra, Executive Director Finance (Resource Mobilization) Railway Board, conducted the proceedings of the programme.

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