FM eyes dividends to evade 145;D146; word

The 8216;8216;D8217;8217; word has assumed a new dimension in Budget 2006. While the Budget is silent on disinvestments of public sector...

The 8216;8216;D8217;8217; word has assumed a new dimension in Budget 2006. While the Budget is silent on disinvestments of public sector undertakings PSUs, Budget documents for 2006-07 show that the finance ministry is increasingly tapping PSUs for dividends to meet its revenue requirements.

Documents show that of all non tax revenues, the collection from dividends and profits stands at 36 per cent of the total non tax revenues that has been budgeted for 2006-07. Not only is this 6 per cent higher than what was allocated for 2005-06, the revised estimates under the same head for the corresponding period shows that the government collected close to Rs 1,980 crore more than the allocated amount

Collection of dividends from PSUs is totally within control of the government and in that regard plays a crucial role in enabling the government meet its fiscal deficit targets.

Senior finance ministry officials say that at a time when the public sector companies are reaping profits and making money on account of a booming economy, the government has every reason to tap these companies for dividends.

This year8217;s Budget documents indicate that the government plans to tap Rs 2,019 crore more than the revised estimate of Rs 25,481 crore for 2005-06. Therefore, in actual terms, it plans to get Rs 27,500 crore as dividends and profits from PSUs.

A comparison between the revised and budget estimates for 2005-06 of total revenue receipts show it to be lower by Rs 2,726 crore as compared to the budget estimate of Rs 3,51,200 crore.

Total revenue receipts comprise of both tax and non tax revenue receipts. While non-tax revenues form 20 to 22 per cent of the total revenue receipts during 2005-06, but a comparison between the revised and budgeted estimates show that these are lower by as Rs 3,400 crore. As against a budget target of Rs 77,734 crore for 2005-06, the revised estimate is Rs 74,335 crore.

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In fact, the only component barring receipts from union territories that has shown an increase in non-tax revenues is under the head 8216;8216;dividends and profits8217;8217;. All other components of non tax revenues, which include interest receipts, external grants and 8216;8216;other non-tax revenues8217;8217; have shown a dip when revised and budgetary estimates for 2005-06 are taken into account.