The Centre’s dividend receipts from central public sector enterprises (CPSEs) will likely be closer to Rs 59,000 crore achieved in the past two years as against the moderate target of Rs 43,000 crore set for 2023-24. This will largely be thanks to likely robust receipts from the energy, power and commodity sector firms.
The Rs 59,000 crore receipts in FY222 and FY23, despite the government reducing its stake in several CPSEs, were aided by higher commodity prices and the policy of the department of investment and public asset management (Dipam) of nudging CPSEs to give higher dividends.
So, even if the disinvestment receipts fall short substantially against the target of Rs 51,000 crore for FY24, due to likely non-materialisation of big-ticket strategic sales, it won’t alter the Centre’s fiscal math for the year as tax revenues are also on track.
So far in FY24, the Centre has already mobilised Rs 13,792 crore dividend from CPSEs, mostly in the energy, infrastructure and commodity sectors, which is about 18% higher than Rs 11,446 crore collected in the year-ago period.
“Dividend achievement in FY24 will likely exceed the target,” a senior government official told FE.
CPSE dividend receipts under the supervision of the Dipam do not include receipts from state-run financial institutions such as banks and insurance companies.
The Centre’s dividend receipts exceeded the revised estimate (RE) by Rs 16,000 crore or 37% to reach about Rs 59,000 crore in FY23, helping it comfortably bridge the shortfall of Rs 14,706 crore in disinvestment receipts during the year.
Despite the recent hardening of commodity prices, higher earnings by energy and commodity firms will likely boost the dividend receipts from CPSEs in FY24, like in FY22 and FY23.
According to CareEdge, for a sample of 2,076 listed non-finance companies, operating profit rose by 26% (y-o-y) in Q1 FY24 compared to 6% growth in Q4 FY23 as raw material cost moderated.
The state-run oil marketing companies’ (OMCs’) profit surged to Rs 24,300 crore in Q1FY24 as against loss of Rs 8,300 crore in Q1FY23, due to strong marketing margins.
Despite the recent hardening of crude prices, state-run OMCs and upstream Oil and Natural Gas Corporation (ONGC) and Oil India are expected to report robust profits in FY24. These firms pay usually Rs 10,000 crore to Rs 20,000 crore in annual dividends to the Centre except in FY23 as OMCs suffered reported lower profit due to a freeze in retail prices when crude prices surged.
Given the larger surplus receipts from the RBI and likely healthy profits of state-run entities, the Centre’s total dividend receipts could exceed the budget target by around Rs 60,000 crore in FY24, according to an FE analysis.
RBI’s surplus transfer to the Centre rose 188% on year to Rs 87,416 crore in FY24 (for accounting year FY23), which was very close to Rs 91,000 crore estimated from dividend receipts from the RBI, public sector banks and financial institutions (Rs 48,000 crore) and the CPSEs in FY24.