June 09, 2006

Declare Dividends by borrowing-Unfair

Something struck quite unique to me in the recent bonds raised by these oil companies. All of them cited losses if not for these bonds. They showed the receipts of bonds as normal sales. Borrowing of this money by the government as SALES. How can you do it. To top this, they have shown profits in their books and to further aggravate this they have DECLARED DIVIDENDS and the government has coolly taken this money what it gave to them in the first place. The government has borrowed money and distributed this money as dividends, when in reality they have been running losses and have asked ONGC, the scapegoat to bear the losses, as how much can the govt. bear. I have, for long, invested in ONGC as it was one decent company heading somewhere. Today, because of the government, I am forced to share my profits to not only these refining companies but to the entire nation. Just look at it this way. The government raises money from the public, thus raising its deficit. This is a long term borrowing to fund annual shortfall. First mistake funding short term losses with long term funds. Second, receiving dividends from these companies. Why are we borrowing more and receiving dividends and thus showing income in your GDP. This is wrong as you saying that raising capital is SALES. Though most of the dividends it received from this decalaratin by companies is small compared to the overall GDP, I still feel that the entry for this transaction must not be recorded in the books as dividends. There ought to be an alternative such as a book entry for the bonds received for the year and the excess or defecits charged to it rather than to the profit and loss account, where the government gets unfair benefits, (in taxation of profits and dividends received post taxation).

Well, my interest in this government seems to be falling apart for the past few months. There seems to be a lack of proper forecasting like its predecessor-the BJP. Inspite of their current shortcomings, BJP still has a few sound people which I am not seeing in this governemnt. Critical issues being held at gun point by the LEFT and failure to take the RIGHT choices, is keeping this government heading nowhere. We are lucky that this party is spending on infrastructure, else we might be in doldrums.

1 comment:

Anonymous said...

If these oil companies are privatised, they would be one of the most profit making companies, but the ordinary man would have to shell out more for petrol and diesel..

In a scenario where everything is looked from the point of 'vote bank', any govt would never let it( privatisation of oil companies) happen even if the 'left' goes the 'right' way