RBI likely to pay govt up to Rs 40,000 crore interim dividend; funds crucial to bridge widening budget deficit

The dividend could help Prime Minister Narendra Modi’s administration bridge a widening budget deficit following a drop in tax collections.

Reuters January 07, 2019 14:36:24 IST
RBI likely to pay govt up to Rs 40,000 crore interim dividend; funds crucial to bridge widening budget deficit

New Delhi: The Reserve Bank of India (RBI), having changed management last month following a clash with the government, is likely to transfer an interim dividend of Rs 30,000-40,000 crore ($4.32 billion-$5.8 billion) to the government by March, according to three sources with direct knowledge of the matter.

The dividend could help Prime Minister Narendra Modi’s administration bridge a widening budget deficit following a drop in tax collections, and would come after the government pushed the RBI for the additional funds ahead of a national election due by May.

RBI likely to pay govt up to Rs 40000 crore interim dividend funds crucial to bridge widening budget deficit

Representational image. Reuters

Former finance ministry official Shaktikanta Das was appointed as the new governor of the RBI, following resignation of Urjit Patel last month amid tensions over the dividend payout and other issues.

The government and RBI have now appointed a panel to look into the issue around the sharing of the RBI’s reserves.

“We are absolutely sure that an interim dividend of more than Rs 30,000 crore would be paid before March end,” one of the sources told Reuters.

The RBI did not respond to an email seeking comment, while the finance ministry declined to comment.

The funds are crucial to meet the fiscal deficit target of 3.3 percent of the GDP for the financial year ending in March, as the government’s revenue shortfall may be as high as Rs 1 lakh crore, according to two finance ministry officials who declined to be named.

The RBI could make a final decision on the dividend by the time Jaitley presents the government’s budget on 1 February, the sources said.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Narendra Modi lays foundation stone of rural drinking water projects in UP's Sonbhadra and Mirzapur
India

Narendra Modi lays foundation stone of rural drinking water projects in UP's Sonbhadra and Mirzapur

The total estimated cost of the projects is Rs 5,555.38 crore. The projects are planned to be completed in 24 months under the 'Jal Jeevan Mission' announced by the prime minister last year

Narendra Modi addresses troops at Longewala Post on Diwali, says India will give 'fierce reply' if it is tested
India

Narendra Modi addresses troops at Longewala Post on Diwali, says India will give 'fierce reply' if it is tested

In a clear swipe at China, Modi said without naming the country that entire world feels troubled by 'expansionist' forces

Narendra Modi wishes Samajwadi Party patriarch Mulayam Singh Yadav on 81st birthday
India

Narendra Modi wishes Samajwadi Party patriarch Mulayam Singh Yadav on 81st birthday

In his wish, Modi said that Yadav "is one of the senior-most and experienced leaders of our country who is passionate about agriculture and rural development"