Stung by Rs 80,000 crore shortfall in tax collections, Modi govt forces PSUs to cough up more money

State-owned Indian Oil Corp (IOC) has declared a second interim dividend of Rs 1,412 crore for the current financial year and ONGC agreed to do so next week to help the government meet its tax revenue target. In a stock exchange filing, IOC, the nation's biggest oil firm, said its board at a meeting on Tuesday approved payment of Rs 1.50 per share of 15 per cent in second interim dividend for 2018-19 to shareholders.

"The dividend will be credited to the account of the shareholders or the dividend warrant in respect thereof will be dispatched on or before April 10, 2019," it said.

The government owns 53.88 per cent stake in IOC and stands to get about Rs 761 crore, excluding dividend distribution tax.

Separately, Oil and Natural Gas Corp (ONGC), which had initially resisted a government demand seeking a second interim dividend, said a board meeting has been convened on March 23 to consider and declare an interim dividend.

Grappling with a possible Rs 80,000 crore shortfall in direct and indirect tax revenues that will make it difficult to meet a revised fiscal deficit target, the government has been tapping cash-rich PSUs for second interim dividend.

Coal India Ltd on March 14 declared a second interim dividend of Rs 5.85 per share.

The government holds 72.91 per cent stake in Coal India and stands to get Rs 2,647 crore, excluding dividend tax.

Initially, ONGC had resisted paying a second interim dividend on grounds that it does not have surplus cash to make such payments within a month of an interim dividend payout, sources with direct knowledge of the development said.

According to regulations, a company cannot declare a second dividend within a month of the previous payout and companies like ONGC would need to seek approval of markets regulator Sebi to make such a payment.

Sources said the government is struggling to meet the revised fiscal deficit target of 3.4 per cent in view of the shortfall in goods and services tax (GST) collections.

GST shortfall is likely to be around Rs 30,000-40,000 crore and a similar shortfall is expected in direct tax collections as well, they said.

IOC in December declared Rs 6.75 per share interim dividend alongside a Rs 4,435-crore share buyback to help the government meet its revenue targets.

ONGC had announced an interim dividend of Rs 5.25 per equity share on February 14. It also had approved a Rs 4,022-crore share buyback.

Last month, while presenting the annual budget for 2019-20, the government had revised upward its fiscal deficit target to 3.4 per cent of gross domestic product (GDP) for the current financial year from the previously estimated 3.3 per cent budgeted target.

In absolute terms, the fiscal deficit, the gap between the Centre's expenditure and revenue, has been pegged at Rs 6.34 lakh crore for 2018-19.

During the April-January period, fiscal deficit touched Rs 7.70 lakh crore, or 121.5 per cent of the budgeted target for the current fiscal year ending March 31, government data showed.

For the current fiscal, direct tax collection has been pegged at Rs 12 lakh crore while the revised estimate for GST collections has been put at Rs 6.43 lakh crore, which is lower than the targeted Rs 7.43 lakh crore.