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• The Union Cabinet will on Thursday for the second time consider a proposal to allow cash-rich PSUs to buyback shares and acquire stakes in other state-run firms. It will also look at permitting financial institutions to buy the Centre's stake in companies through bulk sales, as the government searches for options to partially meet its disinvestment target and rein in fiscal deficit.The Cabinet had considered a similar proposal in January but could not arrive at a decision as some ministries had opposed the move. Some state-run companies had also expressed the view that they were looking to raise fresh capital for their expansion plans and could not spare cash for buying back the government's stake.

• But this time, Department of Disinvestment officials feel they have allayed the concerns of administrative ministries and state-run firms."It has been explained to them that it will be optional for PSUs to participate in these programmes," said a senior government official. If approved, these measures could give fresh impetus to the government's floundering disinvestment programme which is well short of meeting its 40,000-crore target for 2011-12. With only a month left in the year, the government has so far been able to mop up a meagre 1,145 crore from sale of its shares, and that too only in one company - Power Finance Corporation of India.

• The situation will be somewhat improve in the next few days with the government hoping to raise 12,500 crore by selling a 5% stake in ONGC through a new auction route recently approved by the Securities and Exchange Board of India.The DoD's proposals will allow the government to sell its shares in a state-run company to that company itself as part of a buyback programme. It will also enable the government to sell its shares in one PSU to another PSU.

• These proposals are directed at cash rich PSUs. The government has identified around two-dozen companies with total cash reserves of 1,80,000 crore - about a quarter of whom have more cash reserves than their annual turnover. Coal India, for instance, is sitting on a cash pile of nearly 45,000 crore and generates annual profit of about 10,000 crore."Some of these companies don't have large investment plans. They can return some money to their shareholders through buyback programmes,'' said the government official.

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