Dividend receipts from CPSEs beat revised estimates

The central government’s dividend receipts from Central Public Sector Enterprises (CPSEs) have exceeded the revised budget estimate by 26% to about ₹63,000 crore, with public sector undertaking (PSU) behemoths such as Coal India Ltd, Oil and Natural Gas Corp.

Ltd (ONGC), Power Grid Corporation of India

Ltd and GAIL (India) Ltd making handsome payouts in FY24. The revised estimates of the budget presented in Parliament on 1 February pegged dividend receipts from CPSEs at ₹50,000 crore for the current fiscal.

The actual dividend collections have been about 26% higher at ₹62,929.27 crore in 2023-24, as per the Department of Investment and Public Asset Management (Dipam) website.

In March, the government received hefty dividend tranches from ONGC (₹2,964 crore), Coal India (₹2,043 crore), Power Grid Corporation of India (₹2,149 crore), NMDC Ltd (₹1,024 crore), Hindustan Aeronautics Ltd (HAL) (₹1,054 crore) and GAIL (₹1,863 crore).

In FY23, dividend receipts stood at ₹59,952.84 crore.

Higher dividend is a reflection of the robust financial performance of CPSEs during 2023-24. The payouts by CPSEs also benefit retail and institutional shareholders and will help generate interest in PSU shares.

As per Dipam’s capital restructuring guidelines, CPSEs that do not have plans to deploy their capital optimally for business purposes should have a professional look at the surplus funds available to them.The CPSEs sitting on cash piles are required to pay dividends, which will, in turn, help keep investors interested in the stock.The combined market capitalisation of CPSEs, banks and insurance companies has grown 500% in the past three years from ₹15 trillion to ₹58 trillion.

Also, the government’s equity holding has risen 4 times to ₹38 trillion from ₹9.5 trilling in January 2021.

The combined m-cap of CPSEs, banks and insurance firms has grown 500% in the past three years