Budget Byte: Bad year for PSUs may impact dividend payout to govt

Central PSUs transfer a sizeable dividend to the government

Centre has nudged PSUs to pay higher dividends to assuage revenue pain. Their contribution to exchequer is not negligible. In fact, it is close to the entire urban development Budget of the Centre. Low oil prices coupled with higher margins have increased chances of higher dividend from oil PSUs, the top dividend payers.

A stock market boom year saw a depletion of PSU value on market indices

Though the stock market touched new highs in 2020, the PSU index was late to the party, and has barely recovered to January 2020 levels. A sharp decline in their equity valuations, many of whom are sector behemoths, has already skewed their debt-equity ratios. This may weigh on dividend payout this financial year.