Rbi May Stick To Budget Target On Dividend

The Reserve Bank of India is expected to provide only about Rs 6,100 crore this fiscal compared to Rs 9,350 crore paid last fiscal as its surplus towards non tax revenues.

The higher RBI payout in 2000-01 had come in handy for the government as this was far in excess of the budgetary estimate of Rs 6,179 crore. But in spite of such a large dividend, the total non tax revenue was only Rs 13,565 crore, which was less than the revised estimate of Rs 14,159 crore, mainly due to low dividend payment by PSUs and financial institutions.

The Centre has now asked public sector enterprises to hike their dividend payments to government, to make good the expected shortfall of about Rs 3000 crore. The government has sent a letter to remind all profitable PSUs to pay higher dividends so that the non-tax revenue meets the Rs 16,229 crore budget target for 2001-2. The move has become very important in the face of lagging tax revenues.

To ensure a larger dividend and trim the reserves of the companies prior to disinvestment, the Centre has asked the PSUs to dip into their reserves to pay out their dividends. Sources said this has been done as the government feels that there is no justification to allow the reserves with the PSUs targeted for disinvestment to accrue to the new owners.

The letter also says that to ensure that the excessive payout of dividends does not depress the share value of these companies, the companies should commit a larger dividend payout to the government, from this fiscal itself. In other words, the dividends should not be bunched at the time of disinvestment, as this can create a controversy.