The Reserve Bank of India (RBI) on Wednesday approved the transfer of the surplus amount of Rs 50,000 crore for the year ended June 30, 2018, to the Government of India, which is Rs 5,000 higher than the budgeted amount of Rs 45,000 crore. The RBI follows July-June financial year.
The dividend of Rs 50,000 crore to the government has come as a breather after a low dividend transfer last year (July 2017- June 2018), which economists said, was due to additional costs incurred on printing and managing excess liquidity after demonetisation.
Last year, the RBI transferred only Rs 30,659 crore, against the budgeted amount of Rs 58,000 crore. The transfer was half of the Rs 65,876 crore in the previous year 2016-17 and lowest since 2011-12.
“The Central Board of Directors of the Reserve Bank of India, at its meeting held on August 8, 2018, approved the transfer of surplus amounting to ₹ 500 billion for the year ended June 30, 2018 to the Government of India,” the RBI said in a statement on Wednesday.
The government tried getting additional Rs 13,000 crore from the central bank earlier this year, following which the RBI transferred Rs 10,000 crore as interim dividend for FY18. For the government, which met its revised FY18 fiscal deficit target, an additional fund of Rs 5,000 crore will assist in sticking to FY19 target as well, Saugata Bhattacharya, Economist, Axis Bank told ET Now.
Despite the additional Rs 5,000 crore, the RBI dividend is lower than previous years 2014-15, 2015-16 and 2016-17. In the 83-year-long history, the central bank transferred the highest ever dividend in 2015-16, which was Rs 66,000 crore. The RBI dividend was Rs 65,896 crore in 2014-15; Rs 66,000 crore in 2015-16; Rs 65,876 crore in 2016-17.
As per the RBI Act, the central bank must transfer the balance of its profits, after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds.
Before every Union Budget, the government and the RBI deliberate upon the amount to be transferred as the dividend. The government puts forward its expectation in the budget and the RBI then announces the actual amount of dividend transfer in August after its calculation.