Budget 2013: finance ministry urges PSUs for extra dividend

NEW DELHI: The finance ministry is knocking on the doors of cash-rich public sector units for higher dividends in its usual pre-Budget rush to raise funds that could also bring some cheer to investors.

" PSUs have been sounded out for additional dividend payouts and discussions have begun," said a government official privy to the development.

North Block is leaving no stone unturned to meet the fiscal deficit target of 5.3% for the fiscal and additional dividend income would help it meet any shortfall on the account of spectrum sale targeted at Rs 40,000 crore or tax mop-up.

The ministry has started the pre-budget consultations with central public sector enterprises on the issue.

The Budget 2012-13 has pegged receipts from dividends and profits at Rs 50,152 crore but the finance ministry not only wants to ensure that the target is met but to exceed it.

The Standing Conference of Public Enterprises or SCOPE, the apex body of central government-owned public enterprises, also shot off letters to PSUs about two weeks back cautioning them to spur their investment programmes to avoid paying higher dividends this year.

The government had managed to extract an additional about Rs 7500 crore over its budget estimates in the last fiscal.All profit-making companies in which government has majority stakes are required to declare a dividend of 20% of government's equity or 20% of profit after tax, whichever is higher.



In the case of the state-run companies in petroleum, power, chemical and other infrastructure sectors, the minimum limit is higher at 30% after tax.

Oil companies may be spared this diktat as underrecoveries has worsened their financial situation.

The government has been goading its cash rich companies to speed up their investment plans to stimulate the economy, warning them that in case they are unable to do so then they will have to declare higher dividends.