Dividend dilemma

Dividend dilemma: Dividend policies for PSUs cannot be applied on a one-size-fits-all basis

My VIEW:

January 12, 2016
Level playing field
 This refers to your editorial “Dividend dilemma’ (The Hindu Business Line, January 12). On the face of it the GOI ‘directive’ PSUs including public sector banks(PSBs) to declare dividend at a particular rate if the organisations financials satisfy certain norms would look reasonable. In reality, this is the continuation of a ‘practice’ GOI has been following for some time now. A particular figure is shown in the budget as expected receipts from dividends and surplus profit transfer by PSUs and statutory bodies including RBI and later these organisations are persuaded to fall in line.
Last two years, RBI has been transferring entire ‘surpluses’ without transferring funds to its own reserves which coming down year after year as a percentage to total assets. Two years back, an internal committee of the central bank advised that the reserves level was adequate for three years.
GOI should allow statutory bodies and PSUs including PSBs to professionally manage their finances and should not pressurise to transfer funds back to government in a routine way. This is not denying GOI’s right to dividend and surplus income from organisations it owns. All organisations, both in public and private sectors should be allowed a level playing field in managing their resources, activities and finances factoring in the risk perceptions and growth needs.
M G Warrier, Mumbai


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