Department of Investment and Public Asset Management (DIPAM) and Finance Secretary Tuhin Kanta Pandey said the government is confident of meeting the 4.9 per cent fiscal deficit for the year. He also spoke about the new Central Public Sector Enterprises (CPSEs) capital restructuring norms that mandates them to pay a minimum of 30 per cent of net profit or 4 per cent of the net worth, whichever is higher, as an annual dividend, as well as about miscellaneous capital receipts target and IDBI Bank disinvestment.Â
Speaking to Business Today TV, the Finance Secretary said that the government is confident of meeting the 4.9 per cent fiscal deficit for FY25 and 4.6 per cent for FY26. He said that the government capex has been slow in the first half due to Lok Sabha Elections 2024, and that it is expected to pick up in H2.Â
Pandey said that construction activity was impacted in the first half, and that sectors like railways and highways are expected to do well in the second half.Â
The IDBI Bank disinvestment is on track and has been moved to the next stage of due diligence, he said, adding that financial bids will be invited soon.Â
CPSE CAPITAL RESTRUCTURING
Previously, the 2016 guidelines required a dividend payment of 30 per cent of PAT or 5 per cent of net worth, whichever was higher, without specific mention of financial sector CPSEs.
The updated guidelines allow CPSEs to consider buying back shares if their market price has been consistently below book value for the last six months, provided they have a net worth of at least Rs 3,000 crore and a cash and bank balance of over Rs 1,500 crore.
Additionally, CPSEs with defined reserves and surplus equal to or exceeding 20 times their paid-up equity share capital may issue bonus shares.
Listed CPSEs with a market price consistently exceeding 150 times their face value over six months may consider splitting shares, with a mandatory three-year cooling-off period between successive splits.
These guidelines also extend to subsidiaries of CPSEs where the parent holds over 51 per cent stake and do not apply to public sector banks, insurance companies, or entities barred from profit distribution like those under section 8 of the Companies Act.
The guidelines are effective from the financial year 2024-25 and suggest that CPSEs consider paying interim dividends quarterly or at least twice a year.