The Centre is demanding millions of dollars in dividends from 12 reluctant state companies to make up for an expected tax revenue shortfall this fiscal year, as a slump in economic growth risks New Delhi overshooting its fiscal deficit target.
The demand has been made following a finance ministry assessment on October 25 of the financial health of 14 state companies, including top miner NMDC Ltd and trading firm MMTC Ltd, according to a government document reviewed by Reuters.
The ministry asked 12 of the companies to payout between 30% and as much as 100% of their 2016/17 or 2017/18 net profit in dividends, share buybacks or bonus shares. The other two companies were exempted.
All state companies evaluated by the government sought exemptions. The finance ministry, NMDC and MMTC did not reply to Reuters emails seeking comment.
The country's federal budget is under pressure this year following an unexpected slump in economic growth, which slipped to its lowest level in three years in the three-months ending June, the first quarter of the 2017/18 fiscal year. As of September, the half-way mark for the fiscal year, the budget deficit had reached Rs 4.99 trillion or more than 91% of its full-year target.
Surjit Bhalla, a member of the prime minister's economic advisory council, told Reuters in an interview in October that the government wanted to stick with a budget deficit target of 3.2%. The government's revenues have also been hit by a sharply lower dividend from the central bank.
The assessment by the finance ministry did not specify the combined amount of payouts expected of the 12 companies. But New Delhi has budgeted $21.86 billion in payouts from all state companies this fiscal year, slightly down on the previous fiscal year.