The Centre is expected to receive dividend receipts from central public sector enterprises (CPSEs) closer to the Rs 59,000 crore achieved in the past two years, surpassing the moderate target of Rs 43,000 crore set for 2023-24. This can be attributed largely to robust receipts anticipated from firms in the energy, power, and commodity sectors.
In fiscal years 2022 and 2023, despite the government reducing its stake in several CPSEs, the receipts amounted to Rs 59,000 crore, primarily due to higher commodity prices and the Department of Investment and Public Asset Management (Dipam) encouraging CPSEs to provide higher dividends.
Even if disinvestment receipts fall significantly short of the Rs 51,000 crore target for fiscal year 2024 due to the likely non-materialization of major strategic sales, it won’t significantly affect the Centre’s fiscal calculations for the year, as tax revenues remain on track.
In fiscal year 2024, the Centre has already collected Rs 13,792 crore in dividends from CPSEs, primarily in the energy, infrastructure, and commodity sectors, representing an 18% increase compared to the Rs 11,446 crore collected in the same period last year.
A senior government official stated, “Dividend achievement in FY24 will likely exceed the target.”
CPSE dividend receipts managed by Dipam do not include receipts from state-run financial institutions such as banks and insurance companies.
In fiscal year 2023, the Centre’s dividend receipts exceeded the revised estimate (RE) by Rs 16,000 crore or 37%, reaching approximately Rs 59,000 crore, helping to bridge the shortfall of Rs 14,706 crore in disinvestment receipts during the year.
Despite recent increases in commodity prices, higher earnings from energy and commodity companies are expected to boost dividend receipts from CPSEs in fiscal year 2024, similar to fiscal years 2022 and 2023.
According to CareEdge, a sample of 2,076 listed non-finance companies saw operating profit increase by 26% (year-on-year) in Q1 FY24, compared to 6% growth in Q4 FY23 as raw material costs moderated.
State-run oil marketing companies (OMCs) reported a profit surge to Rs 24,300 crore in Q1 FY24, compared to a loss of Rs 8,300 crore in Q1 FY23, thanks to strong marketing margins.
Despite recent increases in crude oil prices, state-run OMCs, as well as upstream companies like Oil and Natural Gas Corporation (ONGC) and Oil India, are expected to report robust profits in fiscal year 2024. These firms typically contribute between Rs 10,000 crore and Rs 20,000 crore in annual dividends to the Centre, except in FY23 when OMCs reported lower profits due to a freeze in retail prices during a surge in crude oil prices.
Given the larger surplus receipts from the RBI and the expected healthy profits of state-run entities, the Centre’s total dividend receipts could exceed the budget target by around Rs 60,000 crore in fiscal year 2024, according to an FE analysis.
In fiscal year 2024, the RBI’s surplus transfer to the Centre increased by 188% year-on-year to Rs 87,416 crore, which was very close to the estimated Rs 91,000 crore from dividend receipts from the RBI, public sector banks, and financial institutions (Rs 48,000 crore) and CPSEs in fiscal year 2024.
