Getty ImagesNEW DELHI: As the revenues earned by the Central government have dried up, it wants cash-rich public sector undertakings (PSUs) to declare higher dividends this year to reward its shareholders during the ongoing Covid-19 pandemic.
Official sources said PSUs with stock prices higher than the book value and having sufficient cash funds will be asked to shell out higher dividends in Financial Year (FY)-2021.
With the Central government being the largest shareholder in PSUs, higher dividends would help it to fill its coffers at a time when revenue is constrained due to a fall in economic activity during the Covid-19 pandemic and expenditure has risen sharply.
Dividends from non-financial PSUs have been budgeted at Rs 65,747 crore in FY-2021. Any increase in the dividend will boost the non-tax revenue of the government and help it bridge the rising fiscal deficit which as per initial estimate is now pegged close to eight per cent of GDP.
The Finance Ministry has already asked central public sector enterprises (CPSEs) to complete 75 per cent of their capex for the current fiscal by December 31 this year. Those CPSEs faltering would be asked to share a portion of their unused funds to pay higher special dividend to the Central government or undertake a share buyback.
Finance Minister Nirmala Sitharaman and her predecessors, including the late Arun Jaitley and P. Chidambaram, have maintained the policy of advising non-financial state-owned companies that if they are not utilising their cash reserves for capex needs, they should give it to the Centre through dividends or share buybacks.
As per the guidelines by disinvestment department DIPAM, every CPSE is required to pay a minimum annual dividend of 30 per cent of PAT or 5 per cent of the net worth, whichever is higher.
Official sources said PSUs with stock prices higher than the book value and having sufficient cash funds will be asked to shell out higher dividends in Financial Year (FY)-2021.
With the Central government being the largest shareholder in PSUs, higher dividends would help it to fill its coffers at a time when revenue is constrained due to a fall in economic activity during the Covid-19 pandemic and expenditure has risen sharply.
Dividends from non-financial PSUs have been budgeted at Rs 65,747 crore in FY-2021. Any increase in the dividend will boost the non-tax revenue of the government and help it bridge the rising fiscal deficit which as per initial estimate is now pegged close to eight per cent of GDP.
The Finance Ministry has already asked central public sector enterprises (CPSEs) to complete 75 per cent of their capex for the current fiscal by December 31 this year. Those CPSEs faltering would be asked to share a portion of their unused funds to pay higher special dividend to the Central government or undertake a share buyback.
Finance Minister Nirmala Sitharaman and her predecessors, including the late Arun Jaitley and P. Chidambaram, have maintained the policy of advising non-financial state-owned companies that if they are not utilising their cash reserves for capex needs, they should give it to the Centre through dividends or share buybacks.
As per the guidelines by disinvestment department DIPAM, every CPSE is required to pay a minimum annual dividend of 30 per cent of PAT or 5 per cent of the net worth, whichever is higher.
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2 Comments on this Story
 | Satish Jayaraj58 minutes ago milching cows PSUs are for this government. if not enough milk then sell the cow itself. ineffective government with a clueless minister at the helm. |
| Enagula Nath1 hour ago Most PSU are a liability to the government. The very concept of PSS getting fixed salaries not linked to quality or productivity, promotions based on quota and not based on suitability and performance is making taxpayers pay for their salaries. Close down nonviable PSU if there are no buyers to take it. India lacks the environment for doing business without harassment by politicians, labour unions, local mafia, and by harassment by almost all government agencies. As now it's no secret that almost all major corporates are withdrawing their money by reducing their stake in their own companies. Our PM slogan "Use local, be vocal is not really giving results. Indian products are of poor quality and high cost of manufacturing added to all that is the high rates of GST. |