PSE dividends likely to cross govt's target for first time in 8 years

The Central government in 2022-23 is close to exceeding its dividend target from its public sector enterprises (PSEs) for the first time in eight years.

The government has so far garnered Rs 36,835 crore, which is 92 per cent of the Budget estimate of Rs 40,000 crore.

The government is likely to better its Budget target for FY23 because many PSEs declare their dividend in the final quarter of the financial year.

The last time the finance ministry achieved the PSE dividend target was in FY15, when it exceeded the Budget estimate of Rs 27,815 crore by garnering Rs 31,692 crore.

During FY18-FY22, the Centre’s revised estimate was lower than the Budget estimate. The sharpest downward revision was seen for the pandemic-hit FY21, when the government earned Rs 39,750 crore against the Budget estimate of Rs 65,747 crore.

In the period from FY14 to FY17, the government increased the PSE dividend income in its revised estimates against the Budget estimates, only to lower them when the actual estimates were released a year later.

Oil and gas companies contribute a major chunk of PSE dividends. Public-sector oil-marketing companies such as Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum are lagging because they have been facing under-recoveries due to high crude oil prices. 

The state-owned oil and gas production companies have benefited from prices, but are paying windfall tax.

In the last quarter, among the biggest contributors to the Centre’s dividend are Coal India (Rs 6,113 crore), Oil and Natural Gas Corporation (Rs 5,001 crore), Power Grid Corporation of India (Rs 1,791 crore), Bharat Petroleum Corporation (Rs 690 crore), and Steel Authority of India Ltd (Rs 604 crore).

Business Standard had earlier reported that the Department of Investment and Public Asset Management (DIPAM) had suggested that dividends from PSEs be accounted as divestment collection, because both were revenue resources for the government.

Dividend from PSEs (which is part of non-tax revenue) and disinvestment (which is part of miscellaneous capital receipts) are the two separate revenue-generating responsibilities of DIPAM at present.

So far this year, DIPAM garnered Rs 31,107 crore disinvestment receipts through offers for sale, initial public offerings, and share buybacks against the Rs 65,000-crore target.