With cash reserves of top 20 PSUs estimated to climb to Rs 1.6 lakh crore this fiscal, the Centre can cut its fiscal deficit by Rs 20,000 crore by seeking special dividends from state-owned enterprises, Crisil said on Monday.
The top PSUs are "comfortably placed" to pay special dividends of Rs 27,000 crore, over and above their normal dividend payouts without impacting capex plans, Crisil said.
The cash-rich PSUs who can pay special dividend include Coal India, Bharat Electronics, BHEL, BPCL, Container Corporation Of India, Engineers India, GAIL, MMTC, MOIL, Nalco, Neyveli Lignite Corporation, NHPC, NMDC, NTPC, Oil India, ONGC, Power Grid Corporation of India, Shipping Corporation of India, SJVN, Steel Authority of India.
"We estimate, these companies are well placed to distribute 40% of the corpus (Rs 64,000 crore) as dividend without impacting growth plans," it said, adding PSUs paid Rs 37,000 crore in dividend last fiscal.
Apart from the expected shortfall in tax revenue collections, the Centre 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. Crisil Research expects internal accruals and debt inflows for project financing to meet most of the capex requirements in 2013-14.
By the end of this fiscal, the pre-dividend corpus with these companies is expected to be around Rs 160,000 crore.
While the anticipation is that government will have to cut spending to meet its fiscal deficit goal, Crisil said this may not augur well for an economy that has slowed down and fresh spending cuts can also create growth hurdles.
"Hence, the government could persuade companies with large cash reserves to announce special dividends or a buyback programme."