PSU dividends to Centre nearly double since 2020; over 40% comes from 5 gas PSUs

Over the past 5 years, the Union authorities has practically doubled the dividends it has obtained from public sector firms to ₹74,000 crore, with an evaluation by The Hindu exhibiting it depends closely on just a few oil, fuel, and coal firms for a big chunk of those dividends.

The evaluation of company-wise dividend knowledge from the Division of Funding and Public Asset Administration (DIPAM) for the final 5 years exhibits that 5 fuel-related PSUs accounted for 42% of the full dividends the federal government has collected because the monetary yr 2020-21. The evaluation excluded dividends from the Reserve Financial institution of India and the nationalised banks.

These firms — Coal India Ltd, Oil & Pure Gasoline Company (ONGC), Indian Oil Company (IOC), Bharat Petroleum Company (BPCL), and Gail (India) — contributed ₹1.27 lakh crore, or 42.3% of the full ₹3 lakh crore dividends the Centre obtained from non-banking PSUs between 2020-21 and 2024-25.

Minimal minimize in petrol costs

The information additionally exhibits that the 2 directly-owned public sector oil advertising firms (OMCs) — IOC and BPCL — collectively noticed a 255% improve of their dividend payouts to the federal government since 2022-23 and a 65% lower in oil costs. Nevertheless, they solely handed on a 2% lower in petrol costs to the general public.  

The third public sector OMC, Hindustan Petroleum, is owned by ONGC, and never straight by the federal government. 

The overall dividends from non-banking PSUs have additionally grown constantly because the COVID-19 pandemic. The federal government collected ₹39,558 crore as dividends from these firms in 2020-21, which just about doubled to ₹74,017 crore by 2024-25.

Excessive dividends offset sluggish disinvestment

Based on sources within the authorities, this is because of a “calibrated” method to stability revenues from disinvestments and dividends. 

“The federal government’s disinvestment coverage introduced throughout the pandemic continues to be very a lot in place, however it isn’t progressing as quick because it was initially hoped,” the official advised The Hindu. “On the similar time, many PSUs are turning worthwhile and so the federal government is maximising the dividends it could earn from them.”

The disinvestment coverage, formally referred to as the Public Sector Enterprises Coverage, said that the federal government would preserve a minimal presence in strategic sectors and would exit from all non-strategic ones. It was first introduced as part of the federal government’s COVID-19 Atma Nirbhar Bharat package deal in Might 2020.

Nevertheless, since then, enhancing dividends has additionally turn out to be part of official coverage.

Necessary minimal dividends

An workplace memorandum despatched out by DIPAM in November 2024 to all departments of the federal government and the managing administrators of all PSUs laid out new guidelines for a way a lot dividends these firms should pay their shareholders, the biggest of which is the federal government of India.

Based on the brand new guidelines, each Central PSU should pay a minimal annual dividend of 30% of its Revenue After Tax (PAT) or 4% of its internet price, whichever is larger. In reality, the federal government has pushed these PSUs to pay dividends a lot larger than this obligatory quantity.

“The minimal dividend as indicated in para 5.1 above is simply a minimal benchmark,” the workplace memorandum stated. “The CPSEs are suggested to attempt paying larger dividend considering related elements corresponding to profitability, capex necessities with due leveraging, money reserves and internet price.”

Excessive payouts

IOC and BPCL noticed their mixed dividend payouts to the federal government improve 255% between 2022-23 and 2024-25, from ₹2,435 crore to ₹8,653 crore. Dividends of OMCs are paid from their income, which themselves rise if the promoting worth of their gas is larger than the price of their inputs. 

Whereas the worth of crude oil has fallen 65% — from $116 a barrel in June 2022 to $70 a barrel in July 2025 — the retail worth of petrol has solely been lowered by ₹1.95 per litre, or 2%, over this era.