RBI likely to pay bumper interim dividend to centre
NEW DELHI: The Reserve Bank of India (RBI) is likely to transfer an interim dividend of ₹30,000-40,000 crore to the government by March, according to three people aware of the matter.
The amount would be three or four times the sum paid last year and would help the government meet its fiscal deficit target, despite a shortfall in revenue collections, most notably from goods and services tax introduced in 2017, and from divestments.
Prime Minister Narendra Modi’s government has been pushing RBI for more money ahead of what is expected to be a tight national election due by May. As a row flared over fears that the central bank’s independence was being eroded, RBI governor Urjit Patel abruptly quit last month, and was replaced by former finance ministry official Shaktikanta Das. The government and RBI have now selected a panel to look into the issue of RBI’S reserves.
The interim dividend for this financial year ending in March would be decided by RBI board separately and not by the sixmember committee formed to review the future dividend transfer policy, said the people, who asked not to be named as the discussions are private.
“We are absolutely sure that an interim dividend of more than 300 billion rupees would be paid before March end,” one of the people told Reuters.
RBI governor Shaktikanta Das said RBI will announce a decision on giving interim dividend to the government once such a final view is taken.
This will be the second consecutive year in which RBI has given the government an interim dividend, ahead of an annual payout that it normally gives the government in August, following the closing of RBI’S books in June.
The sum the government is pushing for this year is significantly more than the ₹10,000 crore interim dividend it received last year. Following the close of RBI books last year, it paid the remaining dividend of ₹40,000 crore in August 2018.
An interim payout before the end of March would take total transfers from RBI to ₹70,000-80,000 crore for FY19 ending March 31, higher than the previous record payment of ₹65,9000
crore in 2014/15.
RBI could make a final decision on the dividend before finance minister Arun Jaitley presents the government’s budget on February 1, two of the persons cited above said. The funds are crucial to meet the fiscal deficit target of 3.3% of the gross domestic product for the financial year ending in March, as the government’s revenue shortfall may be as high as ₹1 lakh crore, according to two of the persons.