With the danger of the fiscal deficit breaching the Budget target looming large, the Finance Ministry has set its eyes on Central Public Sector Enterprises (CPSEs) for giving higher dividends.

Against the Budget estimate of ₹5.31 lakh crore, it has already touched ₹5.25 lakh crore (98.9 per cent) in first eight months (April-November) of the current fiscal. Finance Minister Arun Jaitley held a meeting with heads of leading CPSEs such as NTPC, SAIL and BHEL.

NTPC Chairman and Managing Arup Roy Choudhury told reporters here after the meeting that the issue of dividend was discussed, but did not clarify whether the Centre asked for a higher dividend.

Present guidelines, as issued by the Department of Public Enterprises, ensure a minimum dividend pay out of 20 per cent of post-tax profits for all profit making CPSEs barring oil, petroleum, chemical and other infrastructure sectors where it is 30 per cent of post-tax profits. Under the circumstances it is normal for the Government to seek special dividend.

Special dividend

The need for special dividend arises as tax collection was just 42.3 per cent of the Budget target. Even the Mid Term Economic Review, tabled in Parliament last month, estimated a shortfall of about ₹1.05 lakh crore in tax revenue.

Though the Centre has initiated some reduction in non-Plan expenditure and expected savings in subsidy pay out, besides raising rates of duties, these may still not be sufficient to bridge the shortfall in overall revenue.

Similarly, there is not much progress on the disinvestment front. The Centre had set a target of ₹43,425 crore from sale of its shares in listed companies this year. But, only ₹1,715 crore has been realised from disinvestment proceeds so far. Now, the Finance Minister is talking about expediting the sell off process in the remaining two-and-a-half months of the current fiscal.

On expenditure front, the Centre has already made a commitment of paying first instalment of compensation within the current fiscal in lieu of phasing out Central Sales Tax. Total compensation is around ₹34,000 crore and first instalment is around ₹11,000 crore. It means the Centre has to look at all other options for raising money.