NEW DELHI: The Centre’s dividend receipts from the Central Public Sector Enterprises (CPSEs) will likely exceed the budget estimate (BE) of Rs 43,000 crore for 2023-24 by close to Rs 20,000 crore, bridging partly the likely shortfall in disinvestment receipts.
So far in the current financial year, around Rs 20,000 crore has been obtained through dividends from the CPSEs, which is 47% of the full-year target.
This dividend tranches so far in FY24 include Rs 3031 crore from the National Investment and Infrastructure Fund, Rs 2182 crore from Indian Oil Corporation, Rs 1,701 core from Power Grid Corporation, Rs 1,556 crore from Coal India and Rs 1,487 crore from NTPC.
CPSE dividend receipts in FY23 were around Rs 59,000 crore, and 70% of which came in the last five months of the year, despite negligible dividends from oil marketing companies (OMCs) as their margins came under pressure due to the freeze in retail fuel prices after the Russia-Ukraine war broke out. OMCs had been paying Rs 6,000-10,000 crore in annual dividends to the Centre.
However, OMCs have reported robust profits in the first two-quarters of FY24. OMC’s profitability surged to Rs 21,500 crore in Q2FY24 as against a loss of Rs 600 crore in Q2FY23, owing to strong marketing margins. These firms had also reported a robust Rs 24,300 crore in Q1FY24 as against the loss of Rs 8,300 crore in Q1FY23. However, the profits of these firms may be dented in the coming and next quarters due to elevated crude oil prices, and the chances of losses are there in Q4 if crude prices firm up beyond a level and retail fuel prices remain unchanged.
Going by the trends so far, the Centre’s dividend receipts in FY24 from CPSEs may be around Rs 60,000 crore, 40% more than the BE.
Despite the government reducing its stake in several of these companies, the Department of Investment and Public Asset Management (Dipam)’s policy of nudging CPSEs to give higher dividends to keep investors’ interest in their stocks is also aided by higher commodity prices.
CPSE dividend receipts under the supervision of the Dipam do not include receipts from state-run financial institutions such as banks and insurance companies.
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 (Rs 43,000 crore) in FY24.
Given the larger surplus receipts from the RBI and close to Rs 20,000 crore extra receipts in CPSE dividends, the Centre’s total dividend receipts could exceed the budget target by at least Rs 60,000 crore, according to an FE analysis. These extra receipts would comfortably cover the expected shortfall of around Rs 30,000 crore in disinvestment receipts in FY24.
Source: The Financial Express