The government's need for cash (to bridge the fisc) is as real as the need for equity by private companies. Here's a solution: one-time special dividends/buy-backs by select large PSUs. This will raise cash for the government and leave room for equity issuances by other businesses.
Prashant Jain, Executive Director & CIO, HDFC AMC, says: "PSUs like Coal India, NMDC, NTPC and Oil India have hoarded Rs 65,000 crore, Rs 22,000 crore, Rs 19,000 crore and Rs 14,000 crore, respectively (September'12). In contrast, Reliance has done a buyback of Rs 4,000 crore. Hindustan Unilever and TCS pay out 50-80% of profits as dividends. Why can't PSUs do the same?" Read More