Finmin Wants CPSEs to Ready Cashback Offers Cos sitting on idle cash with no capex plans told to consider special dividends of 15-100% or even share buybacks
New Delhi: Central government-owned companies sitting on idle cash have been asked to part with it if they have no immediate capital expenditure plans as the exchequer looks to raise funds to meet a likely shortfall in revenue. Such central public sector enterprises (CPSEs) have been asked to consider special dividends of 15100% or even share buybacks.
The finance ministry has told nodal ministries and departments to pass on the clear message that companies cannot have large cash reserves while the government is forced to borrow to fund other programmes.
“PSUs (public sector units) have to spend… If they do not have any immediate plan to invest, then the money can be used for other programmes,” said a government official.
PSUs have also been told to look at avenues other than the government to fund their plans such as monetisation of assets.
Such a drive could result in the generation of resources in excess of the Rs 67,500 crore dividends budgeted from all stateowned companies for the fiscal year ending March 2018.
Apart from this, the government is also talking to the Reserve Bank of India about considering an extra dividend, over and above the Rs 30,659 crore it paid out in the last fiscal year. The RBI’s financial year runs from July to June. The government had pegged a dividend of Rs 58,000 crore from the RBI and public sector banks in the year to June 2017, but the central bank’s payout was 53% down from Rs 65,876 in the previous year, owing to various costs. No dividend was expected from public sector banks that are themselves under stress as they try to clean up their loan books.
State-run companies had cash and bank balances of Rs 2.43 lakh crore at the end of March 31, 2016, down from Rs 2.63 lakh crore in the year earlier because of steep dividends and share buybacks in the last two years.
The government’s April-August fiscal deficit touched 96.1% of that for the full year after it frontloaded expenditure following the early presentation of the annual budget on February 1.
This coupled with lower-than-expected revenues from the auction of telecom spectrum could pose some pressure on the government’s fiscal math as the goods and services tax (GST) that was rolled out in July stabilises. To be sure, the government is confident of meeting the fiscal deficit target of 3.2% of GDP in FY18.