Centre’s PSU Dividends Nearly Double Since 2020, Fuel Companies Lead with 40%

Quick Summary

• Dividend revenue Growth: The Union government has doubled dividends received from public sector companies over five years, reaching ₹74,000 crore in 2024-25.
• PSU Contribution: Five fuel-related psus (Coal India Ltd, ONGC, IOC, BPCL, and Gail India) contributed ₹1.27 lakh crore or 42.3% of the total ₹3 lakh crore dividends from non-banking PSUs between FY 2020-21 to FY 2024-25.
• IOC & BPCL Dividend Surge: Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) saw a 255% hike in payouts to the government between FY 2022-23 and FY 2024-25.
• Crude Oil vs Petrol Prices: Despite a significant drop in crude oil prices by 65%,petrol prices for consumers reduced merely by ~2%.
• Disinvestment vs Dividends: Slow progress on disinvestment has been offset by increasing dividend collections due to profitability among PSUs and revised policies.
• Mandatory Minimum Dividends Rule: As per new rules implemented in November 2024, Central PSUs must pay at least 30% of Profit After Tax or 4% of net worth annually as dividends – whichever is higher.

Indian Opinion Analysis

The government’s reliance on dividend payouts from profitable public sector units signifies the balancing act it is employing amid slower-than-desired disinvestment progress under its Public Sector Enterprises Policy. Fuel-related PSUs lead these contributions due to their consistently strong performance despite fluctuating input costs such as crude oil rates.

Though, while falling global crude prices have eased operational costs for omcs like IOC and BPCL, only a marginal reduction in retail petrol pricing raises questions about consumer benefit versus profit maximization strategy. This approach could spark scrutiny regarding how public sector profitability aligns with citizen welfare objectives.From an economic outlook, mandatory minimum dividend policies indicate strategic fiscal planning but may limit long-term growth prospects if excessive payout demands hinder reinvestment for expansion.For now, growing PSU revenues provide much-needed fiscal support amid challenging global economic conditions post-COVID recovery.

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