PSU Companies to pay Over Rs.3 Trillion Dividend to Government in FY26

The Government of India is expected to receive over Rs.3 Trillion Dividend from public sector companies including public sector banks.

India’s state-run companies are expected to make payments totaling over ₹80,000 crore to the government in the fiscal year 2026 (FY26), marking an all-time high. This increase is due to strong performances from sectors like oil and gas, power, and mining, which are expected to keep contributing significantly to the government’s revenue.

Continued Growth in Dividend Contributions

The payments from state-run companies, known as Central Public Sector Enterprises (CPSEs), are driven by their robust earnings and strategic efforts to improve returns from public sector investments. In FY25, CPSEs collected approximately ₹74,016 crore in dividends, surpassing the revised target of ₹55,000 crore by a significant margin, despite facing global challenges and pressure from domestic demand.

The top contributors in FY25 included major companies like NTPC Ltd, Powergrid Corporation of India Ltd, Hindustan Zinc Ltd, NPCIL Ltd, Coal India Ltd, National Aluminium Company Ltd, and ONGC. These companies are expected to lead the way in dividend payouts for FY26 as well.

Resilience of Public Sector Enterprises

According to experts, the steady performance of these key sectors, despite external challenges, shows the growing resilience of India’s public sector enterprises. With focused reforms and an emphasis on increasing profitability, CPSEs are expected to play an even larger role in supporting the government’s non-tax revenues in the coming years.

Boost from Oil, Gas and Electricity Demand

The oil and gas sector is set to see a significant increase in dividend payouts, driven by strong demand for petroleum products. In FY26, petroleum consumption is expected to hit a record 252.9 million tonnes, a 4.65% increase compared to the previous year, largely due to higher petrol and diesel consumption.

Meanwhile, India’s plans to increase underground coal production by 2028 will help meet the growing energy demands, replacing declining opencast mining and reducing the country’s reliance on coal imports, despite global pressure to reduce fossil fuel consumption.

The country’s electricity demand is also on track for considerable growth. The peak demand for electricity is expected to reach 277 gigawatts (GW) in FY26, compared to around 250 GW in FY25. This increase is in line with the predictions of the International Energy Agency (IEA), which forecasts India’s electricity demand will grow by an average of 6.3% annually over the next three years.

Higher Dividend Expectations for FY26

According to budget documents, the central government anticipates receiving a total of ₹3.25 trillion in dividends during FY26. This figure includes contributions from the Reserve Bank of India (RBI), public sector banks (PSBs), and CPSEs, representing a 12.3% increase from the revised estimate of ₹2.89 trillion for FY25.

The RBI, which paid a record dividend of ₹2.11 trillion in FY24, is expected to contribute a significant portion of the total dividend receipts. In addition, the dividend from CPSEs is estimated to be around ₹69,000 crore in FY26.

CPSE Dividend Growth Over the Years

The dividends paid by CPSEs to the central government have been steadily increasing since FY20. Here’s a look at the rising dividends over the years:

• FY20: ₹35,543 crore
• FY21: ₹39,750 crore
• FY22: ₹59,294 crore
• FY23: ₹59,533 crore
• FY24: ₹63,749 crore
• FY25: ₹74,016 crore

The dividend collection for FY25 exceeded the budgeted estimate of ₹56,260 crore, reinforcing the strength of actual collections.