HINDUSTAN MOTORS-New Car Project

No Market for PSU Bonds Jairaj Kapadia THERE has been a virtual absence of bond floatations by public sector undertakings during this year to raise borrowings in order to augment their resources. The current year's borrowings target for the PSUs is set at Rs 6,038 crore. This is more compared to the amount of Rs 5,721 crorc the PSUs raised last year. But against the figure of Rs 6,058 crore, the amount raised so far is only Rs 500 crore. This amount of Rs 500 crore is what the Mahanagar Telephone Nigam has collected, but which it has received not with an issue of bonds, but as a loan from the Unit Trust of India. While all other PSUs have stayed back from making issues of bonds, the MTNL also has been unable to augment resources with a bonds issue. Officials in the ministry of finance are said to be agitated over the PSUs' failure to issue bonds. According to a report, the officials are examining the steps necessary to help the PSUs to float bonds and raise the required resources. A likely proposal is to allow a higher rate of tax-free interest on PSU bonds against the present permissible 9 per cent, although this year even this tax-free interest is restricted by the finance ministry to Railways bonds.