The government is seen leaning again on dividends pay-outs from PSU's to shore up its budgeted receipts for FY21. It's a different matter whether the PSUs may be able to fulfil the wishful desire of the government for a staggering Rs 66,000 crores (versus Rs 48,256 crores in FY 20) of these budgeted deposits in view of the Chinese virus-induced recession in the economy. As FY21 hurtle towards closure, the government has turned so desperate for cash that it asked the PSUs last month to pay not only higher dividends but also share their quarterly profits without waiting for the full year. It may be recalled that in 2016, the centre had directed the PSUs to pay a minimum dividend of about 30% after-tax or about five percent of their net worth, whichever is higher. This made even the unprofitable PSUs to pay dividends if their net worth was positive. Further, it is reported that the government is tempted again to ask the PSUs to buy back shares from the government to make an extra buck in view of the perpetually bad market conditions for selling off PSU shares to the public. Through this measure, it had collectively raised Rs. 40,000 crores for FYs 19 and 20 from such companies as NMDC, Hindustan Aeronautics, and Coal India. The self-defeating practice of milking the PSUs to leave them high and dry for growth, initiated by former Finance Minister P Chidambaram, is seen to have been consistently worked upon and perfected by the NDA regime to cover up its gross disability in managing the economy. From FY 15 to 19 (and the trend continued unabated in FY 20), the PSUs were made to pay a significant portion of non-tax revenue in the form of dividend pay-outs that totalled Rs 2.04-lakh crore in the form of dividend and other payments. During this period, Maharatnas and Navaratnas paid as much as Rs1.66-lakh crore or 82%. It's anybody's guess what could have been the beneficial multiplier impact on the economy particularly in matters of employment generation if the government had let these PSUs surpluses to be plowed back into the economy as fresh investment and capital formation. ALSO READ: PESB’s dilemma: Five chairmen in five years yet awaiting the sixth one?
Govt to milk PSUs again for pocket expenses
By IndianMandarins - 2020-12-07 11:10:00
The government is seen leaning again on dividends pay-outs from PSU's to shore up its budgeted receipts for FY21. It's a different matter whether the PSUs may be able to fulfil the wishful desire of the government for a staggering Rs 66,000 crores (versus Rs 48,256 crores in FY 20) of these budgeted deposits in view of the Chinese virus-induced recession in the economy.
As FY21 hurtle towards closure, the government has turned so desperate for cash that it asked the PSUs last month to pay not only higher dividends but also share their quarterly profits without waiting for the full year.
It may be recalled that in 2016, the centre had directed the PSUs to pay a minimum dividend of about 30% after-tax or about five percent of their net worth, whichever is higher. This made even the unprofitable PSUs to pay dividends if their net worth was positive.
Further, it is reported that the government is tempted again to ask the PSUs to buy back shares from the government to make an extra buck in view of the perpetually bad market conditions for selling off PSU shares to the public. Through this measure, it had collectively raised Rs. 40,000 crores for FYs 19 and 20 from such companies as NMDC, Hindustan Aeronautics, and Coal India.
The self-defeating practice of milking the PSUs to leave them high and dry for growth, initiated by former Finance Minister P Chidambaram, is seen to have been consistently worked upon and perfected by the NDA regime to cover up its gross disability in managing the economy.
From FY 15 to 19 (and the trend continued unabated in FY 20), the PSUs were made to pay a significant portion of non-tax revenue in the form of dividend pay-outs that totalled Rs 2.04-lakh crore in the form of dividend and other payments. During this period, Maharatnas and Navaratnas paid as much as Rs1.66-lakh crore or 82%. It's anybody's guess what could have been the beneficial multiplier impact on the economy particularly in matters of employment generation if the government had let these PSUs surpluses to be plowed back into the economy as fresh investment and capital formation.
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PESB’s dilemma: Five chairmen in five years yet awaiting the sixth one?
