Government Earns Rs.6,600 Cr as PSU Dividends in FY22

The fiscal year 2021-22 may have been rather disappointing for the disinvestment story. However, the government has collected prolific dividends from central public sector enterprises (CPSEs) in the current fiscal year. Till date the government has received more than Rs.6,600 crore as dividends from a slew of PSE names including GAIL, NMDC, Power Grid, Nuclear Power Corporation of India etc.

Some of the numbers are really stunning for the current fiscal year. Till date, government has received the highest dividend inflow of Rs.2,506 crore from Power Grid Corporation. Another significant contributor to the government’s dividend kitty was mining giant, NMDC, that has paid the government a whopping Rs.1,605 crore this year till date. Both Power Grid and NMDC are extremely cash rich public sector companies.

However, there were other major contributors too. For instance, the Nuclear Power Corporation of India Ltd (NPCIL) has paid dividend of Rs.972 crore to the government while national gas transporter and gas transmitter, GAIL has paid the government a sizable Rs.913 crore in the form of dividends. The final numbers from the oil companies are awaited.

There have been contributions from other PSU companies too. For instance, Hindustan Aeronautics has paid the government Rs.351 crore, Bharat Electronics has paid Rs.149 crore, HLL Life Care has paid Rs.19 crore, FAGMIL has paid Rs.12 crore and NSIC has paid the government a sum of Rs.31 crore as dividends in the current fiscal year till date.

Apart from these, the government also got dividends from unlisted government owned undertakings like the Central Warehousing Corporation, National Highways Infrastructure Development Corporation and Water & Power Consultancy Services (WAPCOS). The government has received dividends of Rs.6,651 crore to be precise from the various PSU undertakings till date during the current fiscal year.

The total earnings for the government from the PSUs this year has been Rs.40,000 crore. This includes the dividends as above, buybacks done at frequent intervals by the public sector enterprises as well as the divestment of selected PSUs done by the government of India till date in this fiscal. This number could look very different once the divestment of LIC and BPCL is completed this fiscal, but for that we must wait and see.

Dividends offer a dual benefit to the government. For retail investors, dividends entail a high cost as they are taxed at the peak rate of tax applicable. However, in the case of the government, the dividends and the taxes both accrue to the government. It is like hitting two birds with one stone.