Though purists will argue the finance minister should not demand special dividends from PSUs, not only does he have few other options to meet the year’s R54,000 crore disinvestment target, he is well within his rights to do so. Including the money that will be raised from PowerGrid’s R7,000 crore FPO, the government has just collected a fraction of its target by selling shares in NLC, MMTC, STC and others. Theoretically, it can get R17,000-18,000 crore from the HZL/Balco residual sale, but that has got stuck in a legal tangle. Selling off SUUTI’s shares in Axis Bank, L&T and ITC can also fetch a tidy sum, but for some reason the government isn’t keen on selling these right now. With the government not letting PSUs like IOC hike LPG and kerosene prices in the homoeopathic way that has been done for diesel, this has badly hurt their attractiveness since each one is staring at large losses—when fund managers were approached to sell IOC’s shares in June, they were worth R7,000 crore versus today’s value of under R5,000 crore.
But even without the SUUTI/IOC sales, the government had banked on getting R18,000-19,000 crore by selling 10% of its shares in Coal India—since the unions are not allowing this to take place, the next-best alternative is to get Coal India to either issue a special dividend or to do a buyback from its huge R67,000 crore cash trove. In any case, unlike PSUs like ONGC and NTPC where the cash-in-hand is perilously close to the year’s capex—in PSUs like SAIL and GAIL, the capex is many times the cash holdings—Coal India’s capex was a niggardly R2,500 crore in FY13. If PSUs can’t spend the money, there is no justification for them hanging on to it.