Hat-trick on cards? Dividends from CPSEs may cross ₹50,000 crore this year too: Report

livemint.com:

central public sector enterprises (CPSEs) are likely to cross ₹50,000 crore during the current fiscal for the third year in a row. It has already exceeded the Budget Estimate (BE) during the current fiscal year, reported Business Line. However, disinvestment proceeds from CPSEs are likely to remain below the Budget Estimate.

Collections from dividend and disinvestment are part of non­tax revenue and maintained by the Department of Investment and Public Asset Management (DIPAM). While combined collection is lower than the target, it is unlikely to affect the fiscal deficit target of 5.9 per cent as mobilisation through direct tax, GST and RBI surplus is likely to be much higher. The higher dividend collection can be attributed to improved profitability of CPSEs and a consistent dividend policy.

For the unversed, a CPSE would pay an annual dividend of 30 per cent PAT (profit after tax) or 30 per cent of the government’s equity, whichever is higher, according to Finance Ministry guidelines announced in 2016. However, due account should be taken of cash and free reserves with the CPSE and, accordingly, special dividend would have to be paid to the government as a return for its equity investments. Further, CPSEs with large cash/free reserves and sustainable profit may issue bonus shares.

“Any case of exception should be explained specifically by the concerned administrative ministry/department concerned to the Secretary DEA," the guidelines say. Later in 2020, an advisory on consistent dividend policy said that the CPSEs, especially companies that pay relatively higher dividends (100 per cent dividend or ₹10 per share), may consider paying quarterly dividend. For others, the frequency could be half yearly.