Commodity prices have seen a stark increase over the past few weeks. This increase in prices is resulting in a windfall for the Centre as profits for public sector companies are also shooting up. The increase in commodity prices can be directly attributed to Russia’s invasion of Ukraine, as the countries are some of the major exporters of raw material and commodities.
The government has already recorded dividends of Rs 53,412.2 crore from PSUs, despite a budget estimate (BE) of Rs 50,027 crore, and a revised estimate (RE) of Rs 46,000 crore. The receipts from PSU dividends in FY2020-2021 were just Rs 39,750 crore.
Companies like GAIL, Hindustan Zinc, Hindustan Copper, and NALCO are especially reaping the benefits of higher prices of aluminium, copper, zinc, lead, nickel, and steel due to the ongoing conflict conflict in Ukraine.
NALCO has recorded profit growth of 246 percent year-over-year in the December quarter, and net profit were up by 429 percent in the first three quarters of the financial year. Hindustan Zinc Ltd and Hindustan Copper Ltd have reported net profit growth of 33 percent and 65 percent, respectively during the third quarter. SAIL’s net profit grew by 12 percent year-over-year in the same quarter.
“Companies such as GAIL, Hindustan Zinc, Hindustan Copper, and Nalco are seeing an upside because of the Russia-Ukraine war as commodity prices have gone up. Metal-based public sector units (PSUs) will pass on the benefit to the government," said Madan Sabnavis, Chief Economist, Bank of Baroda.
OMC PSUs were the biggest contributors to the exchequer. Bharat Petroleum, Hindustan Petroleum, Oil and Natural Gas Corp, and Indian Oil were some of the biggest contributors in terms of dividends.
