The Finance Ministry has asked all profit-making oil pubic sector undertakings (PSUs) to pay a minimum 30 per cent dividend in the current financial year.
At present, all profit-making PSUs are required to declare a minimum dividend on equity of 20 per cent or a minimum dividend payout of 20 per cent of post-tax profit, whichever is higher, subject to availability of disposable profits.
However, for the 14 PSUs in the oil sector, including Oil & Natural Gas Corp, Indian Oil Corp and GAIL India, the Ministry has sought a 30 per cent dividend, official sources said.
The Finance Ministry believes dividend from PSUs is a return on investment made by the government, and it should be commensurate with profits. “A lower than reasonable level of dividend would be construed as an implicit subsidy, which the government can ill afford, given the level of its commitments, especially in the social sector, and its obligations to meet the fiscal targets,” it wrote to the Oil Ministry last month.