The Centre can reduce its fiscal deficit by as much as Rs 20,000 crore this fiscal by using cash reserves of public sector units (PSUs), according to Crisil Research.
By March 31, 2014, the top 20 PSUs, by cash holding, will have an estimated pre-dividend corpus of around Rs 1,60,000 crore. These companies are comfortably placed to pay special dividends of Rs 27,000 crore over and above their normal dividend payouts, without impacting capex plans, it said.
Apart from the expected shortfall in tax revenue collections, the Union government may not be able to meet its disinvestment target, which could result in it falling short of the budgeted fiscal deficit. In such a scenario, the cash reserves of PSUs provide an alternative source of income. However, a lot will depend on whether the government is able to convince the companies to part with the surplus cash as a special dividend, said Mukesh Agarwal, president, CRISIL Research.
At the end of the last fiscal, the total cash holding with these 20 PSUs was Rs 1,70,000 crore. We estimate, these companies are well placed to distribute 40 per cent of the corpus (Rs 64,000 crore) as dividend without impacting growth plans, it said.