The Indian government has successfully collected ₹59,638 crore in dividends from Central Public Sector Enterprises (CPSEs) in the financial year 2024-25 (FY25), exceeding its revised target of ₹55,000 crore. This amount is a part of the government’s non-tax revenue, which includes earnings from various state-owned enterprises. In addition to dividends, the government has also received ₹8,625 crore from disinvestment proceeds, bringing the total receipts under the Department of Investment and Public Asset Management (DIPAM) to ₹68,263 crore.
Shifting Focus from Disinvestment to Non-Tax Revenue Growth
Over the past few years, the Indian government has adjusted its approach to managing public sector enterprises. Earlier, the focus was on disinvestment—selling stakes in CPSEs to generate revenue. However, since the post-election Budget of June 2024, the government has moved away from setting fixed disinvestment targets. Instead, it is now emphasizing boosting non-tax revenue collections, such as dividends from CPSEs, surplus transfers from the Reserve Bank of India (RBI), and earnings from telecom spectrum auctions.
This shift in strategy allows the government to maintain fiscal discipline while ensuring that state-owned enterprises contribute significantly to revenue generation.
Oil & Gas Sector CPSEs Lead Dividend Contributions
According to government sources, oil and gas companies have been the biggest contributors to CPSE dividends in FY25. These companies generate substantial profits, making them a key source of revenue for the government. Dividend payouts from CPSEs play an essential role in the government’s budget planning, helping fund public expenditure and reducing dependence on borrowing.
New CPSE Capital Restructuring Guidelines Introduced
To ensure that CPSEs continue to perform efficiently and generate higher returns, the government has introduced new capital restructuring guidelines.
On November 18, 2024, DIPAM released updated guidelines replacing the previous May 2016 framework. These changes take into account:
✅ Market conditions that impact CPSE performance
✅ Regulatory updates that affect financial management
✅ Industry-specific trends influencing CPSE operations
The objectives of these new guidelines are:
✔️ Enhancing CPSE value and maximizing shareholder returns
✔️ Improving financial and operational flexibility
✔️ Boosting efficiency in decision-making and resource allocation
✔️ Encouraging broader investor participation in CPSE stocks
By implementing these updates, the government aims to make CPSEs more competitive, profitable, and attractive to investors.
Steady Growth in CPSE Dividend Collections Over the Years
The dividend income from CPSEs has been growing steadily over the past few years, consistently exceeding government estimates. Here’s how it has increased:
📌 FY21 – ₹39,750 crore
📌 FY22 – ₹59,294 crore
📌 FY23 – ₹59,533 crore
📌 FY24 – ₹63,749 crore
📌 FY25 (So far) – ₹59,638 crore (Surpassing ₹55,000 crore target)
Looking ahead, the government has set a higher dividend target of ₹69,000 crore for FY26, reflecting its continued focus on revenue generation from CPSEs.
Why CPSE Dividends Matter for the Indian Economy
CPSE dividends serve multiple purposes for the Indian economy:
🔹 They provide the government with non-tax revenue, reducing reliance on tax collections.
🔹 They help fund infrastructure projects, welfare schemes, and other public services.
🔹 They support the government’s goal of fiscal consolidation, reducing the need for excessive borrowing.
🔹 They boost investor confidence in CPSE stocks, leading to better stock market performance.
As the government continues to refine its policies, public sector enterprises will play a critical role in ensuring financial stability and economic growth. The new capital restructuring guidelines and strategic dividend policies are expected to further enhance the performance of CPSEs in the coming years.
