28 July 2007

Press Statement

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

On Allowing CPSEs to Invest in Mutual Funds

The recent decision by the Cabinet Committee on Economic Affairs to permit  Navaratna and Miniratna PSEs to park 30 per cent of their surplus funds in equity based mutual funds is a retrograde step. Channelising public sector funds into the secondary market in order to make speculative capital gains amounts to wasting public resources on socially unproductive investments.  The CPI(M) and the Left parties had earlier suggested that the reserves of over Rs. 2,39,000 crore currently being held by the CPSEs should be utilised by massively increasing capital investments by the CPSEs in expanding their scale of operations and creating fresh capacity, diversifying their activities if necessary.  The Union Government can also mobilise a part of this surplus by seeking  higher dividends to fund infrastructure projects and social sector schemes.  The UPA government seems to be more interested in fuelling the stock market boom by using public sector surpluses.  The experience of the UTI scam, where a huge amount of public funds was squandered through speculative investments, should have precluded such a reckless decision.

The Polit Bureau of the CPI (M) is opposed to this step. The government should find better ways of utilising the surplus funds of the CPSEs in productive activities that generate employment and serves the interests of the people.