The Finance Minister may have patted himself on the back for managing to keep the fiscal deficit for the current financial year below the “red line” of 4.8 per cent at 4.6 per cent, but to achieve this target, the Government milked its Maharatna companies like Coal India and public sector banks by seeking hefty dividends from them.
According to figures provided by Budget documents, there was an astounding 44 per cent jump in dividends sought from PSUs by the Government. While the actual estimate for the current fiscal in terms of dividends was pegged at Rs 29,870 crore, the revised estimate for the same went up to Rs 43,074 crore.
While dividends or surplus of RBI and other nationalised banks sought by the Government also have gone up in the revised estimates for FY14 compared to the actual estimates, the increase here is just 2.5 per cent. The actual estimate for dividends or surplus from banks was Rs 43,996.24 crore, which was upwardly revised to Rs 45,113.35 crore.
This goes on to show that State-owned entities, especially cash-rich Maharatna companies were under great pressure to add up to the Government’s coffers. As it is, the Finance Minister had a few months back, asked them to buy equity stakes in other PSUs. ONGC and Oil India ltd (OIl) were recently asked by the Government to jointly buy 10 per cent Government’s stake in Indian Oil Corporation (IOC).
In fact, if the revised estimates of dividends from PSUs and that from public sector banks and RBI which the Government sought in the current fiscal are added up, it comes to Rs 88,188 crore, which is Rs 14,320 crore more than the original estimate pegged in the previous budget.
Originally, the Government had expected to get Rs 73,866 crore, of which Rs 29,870 crore had been targeted from PSUs and Rs 43,996 crore from banks. The Government has estimated that it will get Rs 77,229 crore from dividend and profits in 2014-15 from PSUs State-owned banks and financial institutions.
Chidambaram had repeatedly asked PSUs to increase spendings or dole out higher dividend to shareholders. The Government is the majority owner of PSUs. Maharatna company Coal India ltd (CIl) alone provided Rs 19,000 crore to the Government as dividend and dividend distribution tax.
The higher dividend collection helped the Government to restrict the fiscal deficit to 4.6 per cent of GDP in the current financial year when the PSU disinvestment programme did not take off as planned. In fact the Government has been forced to cut down its disinvestment target of Rs 40,000 crore for the current financial year by 60 per cent to Rs 16,027 crore. So far the Government has managed to garner a paltry Rs 3,500 crore in this fiscal.
For 2014-15, the Budget has kept a target of Rs 36,925 crore for disinvestment and the Government plans to garner Rs 15,000 crore by divesting its share in non-Government companies.