India is demanding billions of rupees in dividends from 12 reluctant state companies to make up for an expected tax revenue shortfall this fiscal year, as a slump in economic growth risks New Delhi overshooting its fiscal deficit target.
The demand has been made following a finance ministry assessment on Oct. 25 of the financial health of 14 state companies, including top miner NMDC Ltd and trading firm MMTC Ltd, according to a government document reviewed by Reuters.
The ministry asked 12 of the companies to payout between 30 percent and as much as 100 percent of their 2016/17 or 2017/18 net profit in dividends, share buybacks or bonus shares. The other two companies were exempted.
All state companies evaluated by the government sought exemptions. The finance ministry, NMDC and MMTC did not reply to emails seeking comment.
India’s federal budget is under pressure this year following an unexpected slump in economic growth, which slipped to its lowest level in three years in the three-months ending June, the first quarter of the 2017/18 fiscal year.
As of September, the half-way mark for the fiscal year, the budget deficit had reached 4.99 trillion rupees or more than 91 percent of its full-year target.