While a delay in the launch of the mega LIC IPO will lead to a huge shortfall in disinvestment receipts in FY22, the government has already exceeded its revised estimate (RE) of Rs46,000 crore for dividend receipts in the year. As of March 9, dividends receipts from central public sector enterprises (CPSEs) stood at about Rs 50,000 crore, according to official sources.
With the government prodding the CPSEs to pay more dividends, the dividend receipts could rise further by March-end. This could help the Centre offset the fall in non-tax revenues from the RE level, to an extent.
In the RE for FY22, the Centre had slashed such dividend receipts from the Budget estimate (BE) of Rs50,000 crore to Rs46,000 crore. A sharp rise in commodity prices will help the government garner more dividends from companies in the metals, mining and petroleum sectors, among others.

On Wednesday, the government received Rs 2,857-crore dividend from Power Grid, NALCO, BPCL and MSTC. On March 4, it had received about 2,253 crore from NTPC and SJVN. The government also gets a tidy sum from the Reserve Bank of India and public sector banks as surplus transfer/dividends. The revised estimate on this account for FY22 is 1.01 lakh crore, as against a BE of Rs 53,500 crore, thanks to higher-than-expected transfers from the RBI.
The Department of Investment and Public Asset Management (DIPAM) has been prodding the CPSEs to pay dividends quarterly to sustain investor interest in their stocks.
Earlier, DIPAM had advised the CPSEs to strive to pay higher dividends, taking into account relevant factors like profitability, capex requirements, cash/reserves and net worth, after observing that many CPSEs usually consider only paying a minimum dividend as per guidelines. According to DIPAM guidelines, CPSEs would pay a minimum annual dividend of 30% of profit after tax or 5% of net worth, whichever is higher.
The market volatility after the outbreak of the Ukraine-Russia war has forced the government to review the proposed LIC IPO, which may not hit the market as planned during this month, on concerns that foreign investors may stay away from the issue. Without the LIC IPO, the government’s disinvestment receipts could be just Rs15,000-20,000 crore in FY22. However, buoyancy in tax revenues will help the Centre contain its fiscal deficit within the targeted 6.9% of GDP in FY22.
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