The weaker side of generosity

High dividend payouts reflect low growth expectations

An analysis of India’s largest corporations — those comprising the BSE500 index — shows dividend payouts, which are profits repatriated to shareholders, have grown steadily over the past five financial years even as profit growth has faltered. The index covers every sector and includes public sector undertakings (PSUs), as well as overseas subsidiaries of Indian-owned private-sector businesses. So this indicates a broad trend.

In each of the last five financial years, these companies have paid at least 30 per cent of aggregate net profit as dividend. Aggregate dividend has grown from Rs 1.76 trillion in 2017-18 to Rs 3.02 trillion in