FinMin to meet CPSEs, banks on dividend payouts in FY12

Ministry to ascertain situation and look at ways to get additional revenue

Ahead of the Budget for 2012-13, economic affairs secretary R Gopalan is meeting the CMDs of PSUs and nationalised banks and also the financial advisers of the concerned ministries this week to ascertain dividend payout situation in the current financial year.

First such meeting is slated for Thursday (tomorrow), which has gained significance as the government is expecting the Central Public Sector Enterprises (CPSEs) and nationalised banks would be forthwith in paying additional dividends this year in the backdrop of a tough fiscal situation.

Special dividends from PSUs has been listed as one of the options in the extended disinvestment strategy which also includes bulk sale and buybacks as the modes through which government stake sale in CPSEs will be pushed to avoid the adverse market situation and garner additional revenue in 2011-12.

A senior finance ministry official said that the government was likely to ask these entities to go for additional payouts as much as possible this year to the government taking into account their financial health and keeping in mind the challenges on the fiscal deficit front.

Sluggish tax collection, especially on the direct tax front, growing oil subsidy burden and minimal disinvestment proceeds are set to push the fiscal deficit in 2011-12 to substantially more than the budget target of 4.6 per cent of GDP.

The total dividends and profits from public sector enterprises and on other investments in 2009-10 was Rs 21024.40 crore. The revenue from dividend and surplus of Reserve Bank of India (RBI), nationalised banks and financial institutions stood at Rs 29,223.98 crore in the year. Total dividend and profit amount that accrued to the exchequer in 2009-10 on these two accounts was Rs 50248.38 crore. 

It's time to pay more to the Government
Dividend and Profits (in Rs crore):
Heads	Actual	Budget	Revised	Budget
	2009-10	2010-11	2010-11	2011-12
Dividends from *CPSEs and on other investments.	21,024.4	23,847.17	25,978.1	23,494.47
Dividend/Surplus of RBI, Nationalised banks and Financial institutions.	29,223.98	27,461.42	22,748.66	19,129.21
Total	50,248.38	51,308.59	48,726.76	42,623.68
Source: Budget 2011-12
*Central Public Sector Enterprises

The budget estimate on this count for 2010-11 was kept at Rs 51,308.59 crore— Rs 23,847.17 from CPSEs and Rs 27,461.42 crore from RBI and nationalised banks. This was revised to Rs 48726.76 crore – Rs 25978.10 crore from CPSEs and Rs 22748.66 crore from RBI and nationalised banks.

In 2011-12, budget estimate has been pegged at Rs 42,623.68 crore— Rs 23494.47 crore from CPSEs and Rs 19129.21 crore from RBI and nationalised banks.

The Centre— running out of cash, and time before the Budget to meet its fiscal deficit target— will get as dividend Rs 3,964 crore from its flagship listed firm Oil and Natural Gas Corporation (ONGC). The state-owned explorer, in which the Centre owns 74.14 per cent or 6.34 billion shares, informed the Bombay Stock Exchange that the Board of Directors has approved an interim dividend of Rs 6.25 per equity share for 2011-12.

Seeking to shore up its finances, the finance ministry had earlier asked cash-rich oil public sector undertakings (PSUs) like Oil and Natural Gas Corp (ONGC) to consider special dividend over and above the 30 per cent interim dividend they anyway have to pay.

According to norms, all profit-making state-owned firms are required to declare a minimum 20 per cent dividend on equity or a minimum dividend payout of 20 per cent of post-tax profits, whichever is higher.

The finance ministry has communicated to the concerned ministries that the minimum dividend payout for PSUs in oil and gas, chemical and other infrastructure sectors would be 30 per cent this year.