Mumbai: The Reserve Bank of India (RBI) has announced a record dividend payment of Rs 2.11 lakh crore to the government for the fiscal year ending March 31. This amount is more than double the budgeted expectation and will bolster revenue as a new government prepares to take office.
The decision to transfer the surplus was made at the 608th meeting of the RBI board on Wednesday, as stated in an official RBI communication.
In the interim budget for the fiscal year 2024-25 (April 2024 to March 2025), presented in February, the government had anticipated a receipt of Rs 1.02 lakh crore as dividends from the RBI, public sector banks, and financial institutions.
The surplus transfer from the RBI to the Centre for the fiscal year 2022-23 was Rs 87,416 crore. The previous record high was Rs 1.76 lakh crore in 2018-19.
“The Board...approved the transfer of Rs 2,10,874 crore as surplus to the Central Government for the accounting year 2023-24,” the RBI’s statement read.
The central government’s goal is to limit the fiscal deficit, the difference between expenditure and revenue, to Rs 17.34 lakh crore (5.1 per cent of the GDP) in the current financial year.
Experts believe that the larger-than-expected dividend payout will give the incoming government more flexibility to increase spending and manage the fiscal deficit more effectively.
The results of the ongoing Lok Sabha elections will be announced on June 4, and the new government is expected to take office soon after.
The RBI board also evaluated the global and domestic economic landscape, including potential growth risks.
The board reviewed the RBI’s operations during 2023-24 and approved its Annual Report and Financial Statements for the past fiscal year.
The RBI stated that from 2018-19 to 2021-22, due to macroeconomic conditions and the impact of the Covid-19 pandemic, the board decided to keep the Contingent Risk Buffer (CRB) at 5.50 per cent of the RBI’s balance sheet size to support growth and overall economic activity.
With the economic recovery in FY 2022-23, the CRB was raised to 6.00 per cent. Given the robust and resilient economy, the board has decided to increase the CRB to 6.50 per cent for FY 2023-24.
The RBI explained that the transferable surplus for 2023-24 was determined based on the Economic Capital Framework (ECF) it adopted in August 2019, following the recommendations of the expert committee led by Bimal Jalan.
The committee suggested that the risk provisioning under the CRB should be kept within a range of 6.5 to 5.5 per cent of the RBI’s balance sheet.