What Chidambaram wants from PSUs

Finance Minister P Chidambaram on Friday told heads of large state-owned companies that the government will not accept less dividend that what it received during the last financial year.

"Dividend payments by PSUs will not be less than last year's. In no case will we accept dividend less than last year's," he told reporters after meeting heads of blue-chip PSUs such as Oil & Natural Gas Corp, Indian Oil, GAIL India, Steel Authority of India, NTPC and Coal India. 

The government is seeking to keep its fiscal deficit within the budgetary target of 4.8 per cent of GDP.

Higher dividend from PSUs would make up part of the shortfall from disinvestment and lower receipts in other heads of accounts due to slowing economic growth.

The ministry, according to officials, is hopeful of meeting the dividend receipt target in the current fiscal and has not sought any special dividend.

However, they said the situation would be reviewed in January.

The government received Rs 55,443 crore (Rs 554.43 billion) as dividend and profit in the last fiscal.

The target in the current financial year is Rs 73,866 crore (Rs 738.66 billion).

Chidambaram also discussed capital expansion plans of the PSUs with the objective of promoting investment and growth.

"Most of the PSUs will achieve their capex plan. Some half-a-dozen may not. We will revisit those cases in January," the minister said.

Most of the PSU heads assured the minister that they would meet the capex target for the current fiscal.

ONGC Chairman Sudhir Vasudeva told reporters, "The Finance Minister was fully satisfied by the performance of ONGC.

“Our H1 capex target was over Rs 14,000 crore (Rs 140 billion).

“We have spent 99.3 per cent.

“We will spend this fiscal year's capex plan of Rs 35,000 crore (Rs 350 billion).

We have cash of around Rs 13,000 Crore (Rs 130 billion)."

Sail was confident of achieving its capex target for the current fiscal, Chairman C S Verma told reporters.

"We have met 87 per cent of capex target of first half of the year. We will meet capex target of whole year, which is Rs 11,500 crore (Rs 115 billion)", he said.

Last week, Chidambaram said at an IMF committee meeting in Washington that the government is committed to the path of fiscal consolidation and has drawn red lines for the fiscal and current account deficits.

"We shall not allow the red lines to be breached under any circumstances and we shall remain within the red lines.

“We are prepared to take difficult decisions in this regard, should the need arise," the minister had said.

Against a disinvestment target of Rs 40,000 crore (Rs 400 billion), the government has so far raised Rs 1,400 crore (Rs 14 billion).

India's gross domestic product growth slowed to 5 per cent in the year ended March from an average of 8 per cent over the past decade. First-quarter (April-June) growth slipped to 4.4 per cent from 4.8 per cent in January-March.

The World Bank slashed India's growth forecast for the current financial year to 4.7 per cent from its earlier projection of 6.1 per cent.

The International Monetary Fund estimated an average growth rate of about 3.75 per cent in market prices for India.

The Finance Ministry has said India's economic growth will exceed 5 per cent.