The recent surge in dividends paid by central public sector enterprises (CPSEs) has caught the attention of Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM). He applauded these state-run entities for their impressive payouts, which stand in stark contrast to the dividends offered by private sector companies. Chawla emphasized the need for private corporations to step up and provide fair dividends to their minority shareholders, aiming to foster a more dynamic market that benefits the common citizen.

CPSEs Set a Record in Dividend Payments

In the fiscal year 2025, CPSEs, excluding state-run banks and financial institutions like LIC, made an astounding dividend payment of ₹74,017 crore. This impressive figure has been bolstered by DIPAM’s strategic value creation framework, designed to keep investors engaged with CPSE stocks. The government’s share of this total amounted to approximately 49.3% of the ₹1.5 lakh crore in dividends distributed to all investors, including minority shareholders.

• CPSEs’ market cap: Just 10% of overall market capitalization
• Dividend share: Account for 23% of total dividends paid
• Private sector’s dividend share: 77% of total dividends, despite holding 90% of market cap in FY24

Encouraging Private Sector Participation

Chawla’s vision extends beyond the public sector. He plans to meet with representatives from the mutual fund industry next week to advocate for an increased allocation of CPSE stocks in their investment portfolios. This initiative aims to open up opportunities for citizens to invest in the growth of public sector enterprises.

“We’re encouraging fund managers to diversify their portfolios by incorporating more public sector unit (PSU) stocks. This way, everyday investors and senior citizens can productively utilize their savings and participate in the wealth generated by these enterprises,” Chawla stated.

The Importance of Fair Dividends

Currently, CPSEs are mandated to pay a minimum annual dividend of 30% of their profit after tax (PAT) or 4% of their net worth, whichever is greater. Unfortunately, there is no equivalent requirement for private sector companies, which typically maintain an average dividend payout of around 20%. This discrepancy highlights the need for private corporations to recognize their responsibility to minority shareholders.

The Role of Domestic Investors

In times of economic uncertainty, domestic investors, particularly retail investors, have played a crucial role in stabilizing the stock market during periods of foreign capital withdrawal. Chawla noted that the department plans to adjust its disinvestment strategy based on prevailing market conditions, ensuring that both public and private entities contribute to a healthier investment landscape.

By encouraging fair dividends and promoting CPSE stocks, the government aims to create a more inclusive and rewarding market for all investors, ultimately benefiting the common man.