According to Finance Secretary Tuhin Kanta Pandey and the Department of Investment and Public Asset Management (DIPAM), the administration is optimistic about achieving the 4.9% budgetary deficit for the year. Along with the miscellaneous capital receipts target and IDBI Bank disinvestment, he also discussed the new capital restructuring norms for Central Public Sector Enterprises (CPSE), which require them to pay an annual dividend of at least 30% of net profit or 4% of net worth, whichever is higher.
The Finance Secretary told Business Today TV that the administration is certain it can fulfil the budget deficit targets of 4.9% for FY25 and 4.6% for FY26. According to him, the government’s capital expenditures have been sluggish in the first half because of the 2024 Lok Sabha Elections, but they should speed up in H2.
According to Pandey, the first half had an influence on building activity, whereas the second half is anticipated to see strong performance from industries like highways and railroads. He stated that the IDBI Bank disinvestment is proceeding according to plan and has advanced to the next phase of due diligence and that financial bids would be requested shortly.
Previously, the 2016 guidelines did not specifically identify financial sector CPSE and mandated a dividend payment of 30% of PAT or 5% of net worth, whichever was larger. As long as they have a net worth of at least Rs 3,000 crore and cash and bank balances of more than Rs 1,500 crore, the revised standards permit CPSE to contemplate repurchasing shares if their market price has continuously fallen below book value for the previous six months.
Bonus shares may also be issued by CPSE with defined reserves and surplus that are at least 20 times their paid-up equity share capital. Share splitting is an option for listed CPSE whose market price regularly surpasses 150 times its face value over a six-month period. There must be a three-year cooling-off period between splits.
These rules do not apply to public sector banks, insurance firms, or organisations prohibited from distributing profits, such as those under section 8 of the Firms Act, but they do apply to CPSE subsidiaries in which the parent company owns more than 51% of the business. The recommendations, which take effect in the fiscal year 2024–2025, advise CPSE to think about paying interim dividends at least twice a year or quarterly.
