Modi government could receive whopping ₹2.5L crore jackpot from RBI
What's the story
The Reserve Bank of India (RBI) is expected to pay a historic dividend of around ₹2.5 lakh crore for the financial year 2024-25 (FY25).
The expected payout exceeds last year's hefty ₹2.1 lakh crore dividend and may reduce the government's borrowing needs for the current fiscal year.
The precise amount is likely to be revealed by the RBI in late May.
Factors
RBI's dollar sales and liquidity operations boost dividend
The anticipated rise in RBI's dividend comes on the back of two major reasons.
The central bank's massive dollar sales to curb the rupee have greatly contributed to its income. Further, interest earned from massive liquidity operations has also increased potential payouts.
An overseas banking group speculates the dividend could go as high as ₹3.5 lakh crore, an unprecedented high for RBI's payout to the government.
Impact
RBI's surplus transfer to aid government's fiscal gap
The surplus transfer from RBI is expected to help the government bridge its fiscal gap. This would also infuse liquidity into the banking system through government spending.
The government had initially estimated a dividend of ₹2.2 lakh crore in its budget.
Madhavi Arora, Chief Economist at Emkay Global Financial Services, said this dividend provides room for correcting their fiscal deficit and would bring high liquidity beneficial for bond market by reducing yields on shorter-tenure bonds.