PSU Profit Boom Powers Fiscal Gains as Government Eyes Lower Deficit – EQ
In Short : India’s top PSUs posted strong profits in FY25, boosting government finances. Public sector banks saw record ₹1.78 lakh crore net profit, led by SBI. LIC earned ₹19,013 crore in Q4. WCL hit a record pre-tax profit of ₹4,375 crore. Dividend payouts surged, aiding a fiscal deficit of 4.8% of GDP, with plans to lower it further.
In Detail : India’s public sector undertakings (PSUs) delivered impressive financial results in FY25, strengthening the government’s fiscal position significantly. This surge in profitability reflects improved operational efficiencies and a recovering economic environment that supported better asset performance and increased revenues.
Public sector banks (PSBs) collectively recorded a net profit of ₹1.78 lakh crore, registering a 26% year-on-year growth. The State Bank of India (SBI) led this performance, contributing over ₹70,000 crore to the total. Other major banks such as Punjab National Bank and Punjab & Sind Bank also posted substantial gains, driven by better asset quality and a fall in non-performing assets.
In the insurance sector, the Life Insurance Corporation of India (LIC) reported a standout quarterly profit of ₹19,013 crore. LIC’s strong numbers further reinforced its position as a leading PSU and a key revenue generator for the government.
Western Coalfields Limited (WCL), a subsidiary of Coal India, also posted its highest-ever pre-tax profit of ₹4,375.55 crore. The company attributed this achievement to streamlined operations and improved internal coordination. It also disbursed ₹500 crore as an interim dividend to Coal India, highlighting its robust financial health.
Dividend payouts from PSUs increased sharply, with public sector banks alone distributing ₹34,995 crore in FY25—up nearly 26% from the previous year. Coal India led all PSUs with over ₹10,300 crore in dividends, followed by major contributors like ONGC and SBI, adding to the government’s non-tax revenue.
These developments helped the government maintain its fiscal deficit at 4.8% of GDP for FY25, in line with revised targets. With stronger PSU contributions and improved tax collections, the government now aims to bring the deficit down further to 4.4% in FY26, reflecting prudent fiscal management and economic resilience.
