High commodity prices spell boon for India amid Russian-Ukrainian war

Commodity prices have risen sharply in recent weeks. This price increase translates into a windfall for the Center since the profits of public sector companies are also soaring. The rise in commodity prices can be directly attributed to Russia’s invasion of Ukraine, as these countries are among the major exporters of commodities and raw materials.

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 PSU dividend receipts in the financial year 2020-2021 was only Rs 39,750 crore.

Companies like GAIL, Hindustan Zinc, Hindustan Copper and NALCO are particularly benefiting from higher prices for aluminium, copper, zinc, lead, nickel and steel due to the ongoing conflict in Ukraine.

NALCO posted 246% year-over-year earnings growth in the December quarter, and net income increased 429% in the first three quarters of the fiscal year. Hindustan Zinc Ltd and Hindustan Copper Ltd reported net profit growth of 33% and 65%, respectively, in the third quarter. SAIL’s net profit increased 12% year-on-year in the same quarter.

“Companies such as GAIL, Hindustan Zinc, Hindustan Copper and Nalco are seeing an advantage due to the Russian-Ukrainian war as commodity prices have risen. Metal-based Public Sector Units (PSUs) will pass on profits to the government,” said Madan Sabnavis, Chief Economist, Bank of Baroda.

OMC PSUs were the largest contributors to the Treasury. Bharat Petroleum, Hindustan Petroleum, Oil and Natural Gas Corp and Indian Oil were among the biggest contributors in terms of dividends.

(Edited by : Shoma Bhattacharjee)

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