Dividends bridge divestment shortfall

The Centre’s dividend receipts exceeded the revised estimate (RE) by 37% to around Rs 59,000 crore in 2022-23, helping it comfortably bridge the shortfall in disinvestment receipts during the year.

Disinvestment receipts came in at Rs 35,294 crore or 29% lower than the FY23 RE of Rs 50,000 crore, reflecting a shortfall of Rs 14,706 crore, as it did not sell a portion from its residual stake of 29.54% in Hindustan Zinc (HZL).

The Centre’s dividend receipts exceeded the FY23RE of Rs 43,000 crore by Rs 16,000 crore to reach Rs 58,988 crore, aided partly by a fresh tranche of Rs 3,245 crore from HZL.

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The robust dividends in FY23 are also significant as they came in despite negligible dividends from state-run fuel retailers, which otherwise contribute about Rs 10,000 crore annually. Fuel retailers incurred heavy losses in H1FY23 due to their inability to fully pass on the rise in crude prices.

“Despite headwinds, our combined disinvestment and dividend revenue target has been achieved. The CPSEs are performing well and the government’s consistent dividend policy is also observed on the ground,” Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey told FE.

DIPAM oversees disinvestment and dividend receipts. Put together, it has managed to garner Rs 94,013 crore in dividends and disinvestment revenues in FY23 as against the revised estimate of Rs 93,000 crore.

FE had reported earlier that DIPAM will manage to reach its revenue mobilisation target in FY23, despite the shortfall expected in disinvestment receipts.

The overall achievement by DIPAM would help the Centre keep the fiscal deficit reined in at 6.4% of GDP in FY23, despite some variations in various revenue and expenditure heads.

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The Centre had raised its dividend receipts target from CPSEs and other investments (excluding banks) to Rs 43,000 crore in the RE for FY23 from Rs 40,000 crore in the year’s Budget estimate (BE). However, it had cut its disinvestment revenue target by 23% to Rs 50,000 crore in the FY23RE from Rs 65,000 crore in the BE.

As the government did not go ahead with a planned stake sale in HZL by end-March, a shortfall in disinvestment revenues became evident.