New Delhi, Jan. 7: The finance ministry has stepped up pressure on blue-chip PSUs to pay higher or special dividends this year. Lower-than-expected tax inflows and higher expenditure have raised the grim prospect of the government missing its fiscal deficit target.
Top PSU chiefs, who met finance ministry officials here today, were told to pay a higher dividend if they could not give proof of having spent a significant part of their reserves on capital expansion or the modernisation of projects.
Officials said Coal India could be the biggest contributor by paying a special dividend of between Rs 10,000 crore and Rs 15,000 crore. Iron ore miner NMDC is expected to chip in with Rs 2000-2,500 crore and ONGC with Rs 5,000-7,000 crore. Engineering giant Bhel may be asked to pay a dividend of Rs 2,500 crore.
In October last year, the finance ministry had told the chiefs of state-run units that unless they could show significant expansion plans and spending to support such plans, they would be forced to part with some of their idle reserves in the form of higher or special dividends.
Finance minister P. Chidambaram had then told the chairmen of blue-chip PSUs such as SAIL, Coal India, ONGC, OIL, Indian Oil and NTPC that he expected them to at least pay dividends equal to last year’s payout.
During the last financial year, the government had received Rs 55,443 crore as dividend and profit. The target in the current financial year is Rs 73,866 crore.
The “invest or pay-up” diktat had come as North Block battled lower revenue realisation in the face of economic slowdown and the inability to go ahead with plans to sell equity stake in PSUs because of a choppy stock market.
Coal India has the largest reserves of Rs 43,780 crore, ONGC has reserves worth Rs 22,450 crore, NMDC Rs 16,180 crore and SAIL Rs 13,210 crore.
Incidentally, Coal India, SAIL, NMDC and NTPC had sought shareholders’ approval for share buy-back last year. The government as the most important shareholder will obviously benefit from such a buy-back.
PSUs with longer-term investment plans could also be allowed to hold money in G-Secs and mutual funds.