Government unlikely to meet divestment target, to rely on dividends

NEW DELHI: Unlikely to meet the ambitious disinvestment target of Rs 40,000 crore for current financial year, the government is counting on higher dividends from PSUs and banks to keep its fiscal deficit under check.

The finance ministry has been holding meetings with heads of cash rich bluechip PSUs, including ONGC, Coal India and SAIL, to persuade them to pay higher dividends.

Besides, the ministry is also knocking the doors of PSU banks for higher dividend with a view to garner restrict fiscal deficit to 4.8 per cent of GDP, as was envisaged in the Budget for 2013-14.

In case of Coal India, the government has already asked them to either go in for disinvestment or pay special dividend to the government.

"We are looking at special dividends plus divestment. If you exclude CIL, which we all know is not happening, so that special dividend you have to count in divestment," Disinvestment Secretary Ravi Mathur said.

Several state-run banks, including Indian Bank, Syndicate Bank and Union Bank, have already declared interim dividends and a host of them would follow suit next week.

The government, which is striving for every penny to keep its finances under check, has urged the PSUs to either meet their capital expenditure target or pay special dividends.

With only about Rs 3,000 crore in its kitty from stake sale, the government is running out of time to meet the disinvestment target of Rs 40,000 crore as only less than three months are left for the close of the fiscal.

Adding to the woes of the Finance Ministry, the decision on Indian Oil Corporation (IOC) stake sale was deferred last week because of the objections from oil ministry over the pricing of the issue. The sale of 10 per cent stake or 24.27 crore shares of IOC could fetch the exchequer around Rs 4,500 crore.

In the 2013-14 budget, the government has estimated to garner Rs 29,870 crore as dividend from PSUs.

Further, Rs 43,996 crore is estimated to flow in from PSU banks and Reserve Bank of India under the same head.