FinMin seeks 30% dividend from profit-making PSUs

The finance ministry has asked all profit-making public-sector undertakings (PSU) to pay a minimum dividend of 30 per cent of post-tax profit for 2015-16, compared with past instances where only the upstream oil and gas PSUs were asked to pay 30 per cent dividend while minimum 20 per cent dividend was sought from other PSUs.

For the current financial year, the budgeted estimate for dividend from public-sector enterprises (excluding state-owned banks and financial institutions) is Rs 36,174.14 crore - a 27.3 per cent jump from the revised estimates for 2014-15 PSU dividends of Rs 28,423.07 crore, which itself was around Rs 600 crore higher than that year's budgeted estimates.

Budget makers had factored in two conditions while setting the dividend target for the current year. One, de-control of diesel and petrol along with low commodity prices would lead to lower under-recovery burden for upstream oil and gas behemoths such as Oil and Natural Gas Corporation, Oil India, and GAIL. As a result, they would pay higher dividend than the past few years. Second, the budget planners anticipated asking other profitable PSUs for higher dividends as well.

"Although there has been no written communication yet, the chiefs of all profit-making PSUs have been asked if they can pay a minimum dividend of 30 per cent on post-tax income," a senior government official told Business Standard . The official added that a final decision on how much dividend these companies pay would be taken by their respective boards.

Even if not all of these PSUs would be able to pay a 30 per cent dividend, the budget planners are confident that the steep jump notwithstanding, the FY16 dividend target will be met. "Petrol and diesel have been de-controlled.

The LPG (liquid petroleum gas) burden will be picked up by the government, and for kerosene, the oil companies will only have to bear the subsidy burden for beyond Rs 12 a litre," said a second official. "Hence, GAIL, Oil India and ONGC can pay a record dividend."

For 2014-15, ONGC, Oil India and GAIL bore a combined under-recovery burden of close to Rs 43,000 crore, while for 2013-14, they bore around Rs 67,000 crore.

The Centre needs its PSU dividend collections for 2015-16 to be higher than budgeted estimates, in spite of the same PSUs being told to increase their capital expenditure as part of the government's stated objective to raise public spending in infrastructure. With tepid collections from the Black Money compliance window and a spluttering disinvestment programme owing to choppy market conditions, the finance ministry needs to find extra resources to fund the additional Rs 16,000-20,000 crore burden of One Rank One Pension, as well as prepare for the Seventh Pay Commission.

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• For FY16, the budgeted estimate for dividend from PSUs (excluding state-owned banks and financial institutions) is Rs 36,174.14 cr
  

 

The revised estimate for FY15 PSU dividend was Rs 28,423.07 cr
 

Earlier, only the upstream oil & gas PSUs were asked to pay 30% dividend, while 20% dividend was sought from other PSUs