PSU Disinvestment Trends: Dividends, Capex and Stake Sales
Why in the news
An analysis compared how public sector undertakings (PSUs) have fared, and how the state funds and exits them, across the Modi government’s two periods and the latest Budget.
About PSUs
- PSUs, also called Public Sector Enterprises (PSEs), are state-owned firms in energy, manufacturing, finance and telecom.
- They add to GDP, infrastructure, jobs and welfare.
Since 2019-20
- Dividends to government: ₹0.35 trillion, down 19% in 2019-20.
- Capital outlay rose just 2% to ₹8.51 trillion.
- Budget support was cut 7%, giving a 25% share of outlay.
- Stake-sale receipts fell 47% to ₹0.5 trillion.
Growth rates compared (CAGR)
| Indicator | 2014-19 | 2020-21 to 2024-25 |
|---|---|---|
| Capital outlay | 23% | under 2% |
| IEBR | 26% | -10% |
| Dividend payouts | 2% | 9.5% |
| Government capital support | 26% (budget equity and loans) | 21% (share of outlay up to 59% from 25%) |
| Disinvestment | 9% (sale proceeds) | decline of 8% in five years |
Why the change
- The Strategic Disinvestment Policy (2021) aimed to privatise or close unviable PSUs, yet only Air India, Neelachal Ispat and Ferro Scrap were sold.
- Government injected fresh funds into failing PSUs, reversing the privatisation stance.
- It moved to monetisation and leasing of assets.
- No visible gain in dividends or extra budgetary resources; growing reliance on government money shows inefficiency.
Budget 2025-26 signals
- Higher dividends expected from PSUs.
- Disinvestment receipts only marginally higher; no strong stake-sale push.
- Less direct capital support, so PSUs must raise more themselves.
- Return to strategic disinvestment remains unclear.
Exam angle
- Full form: IEBR is Internal and Extra Budgetary Resources.
- Privatised under the 2021 policy: Air India, Neelachal Ispat, Ferro Scrap.