EXCLUSIVE: Dividend payouts expected to shore up govt's FY23 target

The central government is expecting even higher dividend receipts in the current fiscal year than the Rs 40,000 crore it has budgeted for in the current fiscal year ending March 31, 2023.

A Finance Ministry official told Business Today Television that early indications suggest that dividend receipts this year would be as good as the actual collections in the previous financial year.

"Many companies are showing reasonable profits, hence reasonable dividends will also come. Recently, public sector banks have also started to give dividends. We did exceptionally well last year in terms of dividend. Of course, there is a risk due to cost pressure impacting margins and sales. However, we are expecting dividend receipts to be as good as fiscal 2021-22", the official added.

For the year ended March 31, 2022, the centre actually received Rs 59,100 crore in dividend from central public sector enterprises (CPSEs) and other investments. This was nearly 28.5 per cent (Rs 13,100 crore) higher than even the revised estimate of Rs 46,000 crore for the year. Budget 2021-22 had initially estimated dividend receipts of Rs 50,027.81 crore.

Dividends and profits from CPSEs are key sources of income for the central government, which comes under the non-tax revenue category. According to government guidelines, CPSEs would pay a minimum annual dividend of 30 per cent of profit after tax or 5 per cent of net worth, whichever is higher.

The centre's recent decisions of slashing import duty on fuel prices, and relief on custom duty for import of oils will have a major impact on the revenue targets as estimated in the Budget. However, government is currently not looking at additional borrowing, and is confident of meeting its revenue targets through tax collections, and other revenue receipts. The government is also betting on the disinvestment target which is pegged at Rs 65,000 crore for the current financial year. Last year, the centre had to slash its revised estimates for disinvestment from Rs 1.75 lakh crore to 78,000 crore, a target that was not met.

"Our current disinvestment target is also not a moderate target. It is a very big target. We are seeing some pushback in terms of market going down. Due to the market volatility, most value realisations could result in a lesser value than expected. However, it is too early to comment anything," the official added.

In the current financial year, government has been able to collect disinvestment receipts of Rs 23,574 crore so far via the ONGC offer-for-sale and the initial share sale of the Life Insurance Corporation of India.

This comes at a time when the Reserve Bank of India transferred only Rs 30,307 crore as the divided and surplus for fiscal year 2022, sharply lower than the government's expectations.

Also read: RBI approves payment of Rs 30,307 cr dividend to govt for FY22