Dividend windfall may help stretched govt finances as PSUs' financials strengthen

New Delhi, July 20 The dividend windfall from government's holding in public sector undertakings will provide much needed relief to the treasury hard pressed on account of falling revenue and rising expenses for Covid relief work.

According to estimates, with the economy coming back on rails after getting ravaged in the two waves of Covid, dividend income for the government from PSUs may shoot up again in FY22 close to the original budgeted levels for FY21 at over Rs 60,000 crore.

Government sources said that most PSUs are performing well and numbers for the first quarter are indicative of rising revenues and profitability. If this is sustained, the government may get higher income as PSUs dividend this year. Though official sources maintained that no numbers had been worked out as yet, it could be close to double of Rs 30,000 crore garnered from roughly two dozen PSUs in FY21.

In a tweet earlier, Dipam secretary Tuhin Kanta Pandey had said: "Dividend receipts of GoI (Government of India) from CPSEs stand at about Rs 30,369 crore in the current financial year (as of 22.3.2021)." This was actually much below the original budget estimate of dividend income at Rs 65,746.96 crore estimated in FY21 from CPSEs.

It is expected that energy sector companies, especially in oil and gas and power sectors would contribute the maximum towards dividend income of the government this year. OIl sector PSUs are expected to fare well in FY22 as demand for their products, which had fallen last year is picking up fast and reaching pre-Covid levels. Also, firm crude prices may help them make big inventory gains.

Power sector PSUs are also faring well with a rise in demand for electricity both in commercial and household segments.

BPCL, which helped the government mobilise in close to Rs 9,000 crore in FY21 by declaring interim dividend, special dividend (Rs 79 dividend on a share price of Rs 10), is again likely to provide windfall to the Centre if its privatisation plan gets delayed to later part of the fiscal or next year. Also, Coal India, Indian Oil and banking sector PSUs May chip in with higher dividend.

Apart from BPCL, in FY21 Coal India Ltd provided Rs 6,520 crore to the government as dividend, Indian Oil Corporation close to Rs 6,000 crore, State Bank of India around Rs 2,000 crore and GAIL about Rs 1,200 crore. These would be contenders for providing maximum dividend in FY22 as well.

Sources said that if profitability of companies is maintained during the year, certain PSUs may also consider declaring special dividend to payout from their reserves.

The guidelines issued by the department of investment and public asset management (Dipam) in 2016 that every PSU would pay a minimum annual dividend of 30 per cent of profit after tax or 5 per cent of the net worth, whichever is higher, will also push PSUs to declare higher amounts as dividends.

(Subhash Narayan can be reached at [email protected])