CPSE dividends surpass RE, may touch Rs 65,000-crore

The Centre’s dividend receipts from the Central Public Sector Enterprises (CPSEs) climbed to a record high of Rs 61,981 crore as of March 8, may inch closer to Rs 65,000 crore by the end of the year, an official source said.

These dividends which don’t include payments from the Reserve Bank of India and state-run financial institutions, have been driven by robust performance of companies in a wide spectrum of sectors including petroleum, energy, mining and commodities.

The dividend receipts at Rs 61,981 crore so far in FY24 were 24% higher than the revised estimate of Rs 50,000 crore and 44% higher than the budget estimate of Rs 43,000 crore. Such dividend receipts were Rs 58,988 crore in the whole of FY23 and Rs 59,294 crore in FY22.

Given that the oil marketing companies’ (OMCs) profitability has improved substantially due softening of global crude prices compared to last year, the CPSE dividend receipts will likely be in the region of Rs 65,000 crore in FY24. Additional tranches of dividends are expected from Power Finance Corporation, Oil India, Bharat Electronics and Mishra Dhatu, later in March.

Among others, the government received a tranche of Rs 2,043 crore from Coal India on Friday and Rs 2149 crore from Power Grid Corporation of India on Thursday.

The robust dividend by CPSEs has benefited both the government and minority shareholders equally. Despite the government reducing its stake in several of these companies, the Department of Investment and Public Asset Management (Dipam)’s capital management policy of nudging CPSEs to increase efficiency, expand capacity and give higher dividends to keep investors’ interest in their stocks has aided the dividend payouts.

As a result, the market capitalisation of listed CPSEs and government banks/financial institutions increased fourfold from Rs 9.5 trillion in January 2021 to Rs 38 trillion as of early February 2024.

CPSE dividend receipts are an important component of the government’s non-tax receipts. Along with dividends from the RBI, banks and financial institutions, the Centre’s total dividend receipts from all undertakings are expected to exceed the revised estimate of Rs 1.54 trillion for FY24 (BE was 0.91 trillion) by a decent margin.

RBI’s surplus transfer to the Centre rose 188% on year to Rs 87,416 crore in FY24 (for accounting year FY23). Banks and financial institutions have also performed well in FY24, boosting overall dividend receipts to the government.

It is to be noted that the Centre’s net tax revenues are also estimated to exceed the revised budget target in the current financial year, putting the Centre’s finances in a comfortable position to meet the fiscal deficit target of 5.8% of GDP even though the nominal GDP size is expected to be a little lower than anticipated during the budget making.