Government Set to Receive Highest-Ever CPSE Dividends in FY25

The Indian government is on track to receive a record-breaking dividend payout from Central Public Sector Enterprises (CPSEs) in the financial year 2024-25 (FY25). With ₹69,873 crore already received, the figure is expected to cross ₹74,016 crore by the end of the fiscal year, according to a news report. This marks a significant milestone in public sector profitability and contribution to the exchequer, driven by robust financial performances and a revised dividend policy.

Record Dividend Inflows in FY25

Compared to the ₹63,749.3 crore received in FY24, which was, until now, the highest, this year’s projected inflow represents a new benchmark. The increase in dividends reflects improved financial performance across several CPSEs and is a testament to the government’s proactive policy revisions.

Top Contributors: Who’s Paying the Most

Leading the dividend payout list for FY25 is Coal India, remitting ₹10,252.09 crore, closely followed by the Oil and Natural Gas Corporation (ONGC) with ₹10,001.97 crore. Other significant contributors include:

• Telecommunications Consultants India – ₹3,761.50 crore
• Hindustan Zinc – ₹3,619.06 crore
• Bharat Petroleum Corporation – ₹3,562.47 crore

These payouts significantly bolster the government’s non-tax revenues and help in fiscal planning.

Revised Dividend Policy: A Strategic Move

In a bid to maximise returns from public sector undertakings, the government revised the dividend policy for CPSEs last year. As per the new guidelines:

• Each CPSE is required to pay a minimum annual dividend of 30% of its profit after tax (PAT) or 4% of its net worth, whichever is higher.
• Exceptions are allowed only if legal constraints prevent such payouts.

For CPSEs operating in the financial sector, including non-banking financial companies, the minimum payout remains at 30% of PAT, again subject to regulatory allowances.

Beyond the Minimum: Encouragement to Distribute More

The revised policy serves as a benchmark, encouraging enterprises to exceed the minimum requirement where feasible. Factors taken into consideration include:

• Overall profitability
• Capital expenditure needs
• Cash reserves
• Net worth
• Appropriate financial leverage

This approach ensures that CPSEs contribute meaningfully to government revenues while maintaining sound financial health.

The CPSE Landscape: Rising Profits and Better Yields

According to the Public Enterprises Survey, there are 272 operational CPSEs, of which 212 reported profits in FY24. Collectively, these 212 entities posted net profits of ₹3.43 trillion, a remarkable 48% increase from the ₹2.18 trillion recorded in FY23.

Public Sector Banks: Adding to the Dividend Pool

A notable contribution to the government’s kitty also comes from public sector banks. In FY24, the total dividend payout from 12 public-sector banks rose 33% to ₹27,830 crore. Of this, the government received ₹18,013 crore, signalling healthier balance sheets and stronger fundamentals in the banking sector.

Conclusion

The record dividends from CPSEs in FY25 underline a positive shift in the financial performance of India’s public sector. This upward trend, supported by strategic policy changes and improved operational efficiency, not only boosts government revenues but also reflects the maturing financial discipline within CPSEs. The coming years will reveal whether this momentum can be sustained and further enhanced.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

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