Study the passage below and answer the questions.
Passage - III
The change in the Government's focus, from coveting the cash balances of
public sector undertaking (PSUs) to examining how these can be put to better use by
them, is a welcome development. In the current investment - starved environment,
there is certainly a strong macro - economic imperative for inducing PSUs to deploy
funds in capex programmes. But, from a shareholder's perspective- and that applies to
the Government as well - it is also important that funds in excess of their immediate
investment needs, estimated at over Rs. 1 lakh crore, earn a reasonable return. This is
made difficult by rigid and archaic investment norms. So, it is a double whammy,
wherein idle money of state - owned firms neither gets invested in projects nor generates
sufficient portfolio returns. The current guidelines on deployment of surplus
cash by PSUs decree that 60 percent of these should be parked with public sector
banks. The 'public sector' mutual funds requirement is outdated, when many of them
promoted by the likes of UTI, SBI and LIC have roped in foreign partners, making
these ventures little different from pure private sector fund houses. Now that the
investment guidelines are to be reviewed by a Government committee, it may be best
for the Government to just stipulate general prudential norms to be followed by PSUs.
These norms could emphasise safety liquidity of investments, their diversification
across asset classes and securities, and provisions against taking speculative bets, that
expose shareholder funds to capital loss risks.