Many public sector undertakings are likely to be asked to pay larger dividends to help meet the shortfall from other public sector enterprises and state-owned lenders. The government has estimated revenues from dividends from public sector enterprises and other investments at Rs 36,174.14 crore for 2015-16 as against Rs 28,423 crore in 2014-15.

The finance ministry is understood to have asked them to cough up as much as 30% of their net profits. However, even if the 15 highest dividend-paying PSUs shell out 30% of their estimated profits for 2015-16, the payout could be about 25% lower than in FY15. It is possible, therefore, that oil marketing companies, which have reaped a bonanza from the sharp fall in the price of crude oil and the deregulation in petrol and diesel, may be asked to increase their dividend payouts to compensate for the shortfall from other companies.

The profits of NMDC, Oil India, GAIL and National Aluminum (NALCO) for FY16 could fall anywhere between 25% to 50%; that would leave CIL, IOC, BPCL and HPCL to do the heavy lifting.

Coal India — the mining giant which distributed 95% of its FY15 earnings as dividend despite a 9% y-o-y fall in its bottomline during the year — may increase the payout ratio. Analysts expect the miner to report an 8% rise in profits this year.

In FY14, CIL’s dividend payout ratio was 121%. The company has cash and equivalents of about Rs 62,000 crore on its balance sheet, which will give the coal producer more room to distribute dividends. ONGC and NMDC too have some cash on their books, which they may use to pay dividends to maintain a higher payout ratio of 40% to 50%.

On the other hnad, most state-owned lenders could see their profits shrink further as they provide for non-performing assets and ‘emerging stress’. Moreover, they also need to maintain capital adequacy ratios to adhere to Basel III norms.

In H1FY16, a clutch of 25 PSBs collectively reported a 20% y-o-y drop in profits to Rs 16,165 crore and with provisions expected to rise, they are unlikely to be able to match their FY15 collective payout ratio of 20%. The Reserve Bank of India recently acknowledged that the dividend distribution policy of PSBs needed to be reviewed.

While the government had hoped to mop up a sizeable amount from dividends paid out by PSEs and banks to boost revenues, their poor financial performance might put paid to its plans. Indeed, several PSEs are struggling to turn in profits in the wake of the collapse in commodity prices, changes in regulation and weak order books while banks are grappling with non-performing assets.