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Govt source says expect at least 600 bln rupees as dividend from RBI

Monday, Aug 3, 2020

 

–Govt source: Expect at least 600 bln rupees as RBI dividend FY21

–RBI board likely to meet Aug 14 to decide on dividend

 

By Shubham Batra and Adrija Chatterjee


NEW DELHI — The government expects the Reserve Bank of India to transfer at least 600 bln rupees as surplus this month, a finance ministry official said.

 

"(There is) very little hope it will be more than what we have budgeted, but what we have budgeted will come," the official told Cogencis.

 

In February, the then economic affairs secretary Atanu Chakraborty had said that the Budget for 2020-21 (Apr-Mar) has taken into account 600 bln rupees as dividend from the RBI.

 

The RBI's central board is scheduled to meet on Aug 14 to decide on the surplus, another official said.

 

The central bank usually transfers the surplus to the government in August after closing its book for the financial year ending June.

 

The RBI and the government follow different financial years. The apex bank is in the process of changing its financial year to the same as the government from Apr 1, 2021.

 

The government had got a windfall from the RBI last year, thanks to the recommendations of the Bimal Jalan Committee. The central bank transferred a whopping 1.76 trln rupees to the central exchequer for the year ended June 2019, including 526.37 bln rupees of excess contingent reserves and interim dividend of 280 bln rupees paid in February 2019.

 

The RBI did not pay any interim dividend to the government for the year ended June 2020 as the Jalan Committee had recommended that interim dividend should be paid to the government only in "exceptional circumstances".

 

The dividend from the central bank will come at a time when the central government's finances are under severe strain. The government's fiscal deficit as on Jun 30 touched 83.2% of the full year Budget target of 7.96 trln rupees, primarily on account of a sharp fall in revenues due to the nationwide lockdown, imposed to curb the spread of COVID-19.  End

 

Edited by Mainak Moitra

 

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