Covid-19 crisis: Govt assessing the cash position of PSUs to ramp up dividend payouts and share buybacks
Published On: Thursday, May 28, 2020 | By: Team KnowMyStock
The central government is assessing the cash position of state-owned companies and may ask them to ramp up dividend payouts and share buybacks as much as possible, sources said. This comes at a time when the Covid-19 crisis is expected to derail the government’s revenue maths for 2020-21, hitting the mop-up from sources such as taxes and divestment. The government is of the view that since the economic activity is low, central public sector enterprises (CPSEs) are not spending on capital expenditure as much as they would have anticipated, and hence are sitting on cash reserves, which can be used to pay dividends and buy back shares, sources said.
Given that the severe global economic slowdown has led to concerns about how much the Department of Investment and Public Asset Management (Dipam) will be able to do with its big privatisation plans this year, including of Air India, Bharat Petroleum, and Shipping Corporation of India, share buybacks could again form a major chunk of whatever the government manages to get through divestment in 2020-21.
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