The Reserve Bank of India (RBI) on Wednesday announced that it has approved a dividend payout of Rs 2.11 lakh crore to the central government for 2023-24. This is more than double the amount it had paid for the previous financial year 2022-23. The decision was taken at the 608th meeting of the Central Board of Directors of the RBI held under the Chairmanship of Governor Shaktikanta Das.
“As the economy remains robust and resilient, the Board has decided to increase the CRB to 6.50 per cent for FY 2023-24. The Board thereafter approved the transfer of Rs 2,10,874 crore as surplus to the Central Government for the accounting year 2023-24,” RBI said in a statement.
During accounting years 2018-19 to 2021-22, owing to the prevailing macroeconomic conditions and the onslaught of Covid-19 pandemic, RBI had decided to maintain the CRB at 5.50 per cent of the central bank’s Balance Sheet size to support growth and overall economic activity. With the revival in economic growth in FY 2022-23, the CRB was increased to 6.00 per cent.
During the meeting, the Board reviewed the global and domestic economic scenario, including risks to the outlook. It also discussed the working of the RBI during the year April 2023 – March 2024 and approved the annual report and financial statements for the year 2023-24.
“The transferable surplus for the year (2023-24) has been arrived at on the basis of the Economic Capital Framework (ECF) adopted by the Reserve Bank on August 26, 2019 as per recommendations of the Expert Committee to Review the extant Economic Capital Framework of the Reserve Bank of India (Chairman: Dr. Bimal Jalan). The Committee had recommended that the risk provisioning under the Contingent Risk Buffer (CRB) be maintained within a range of 6.5 to 5.5 per cent of the RBI’s balance sheet,” it said in the release.
The 608th meeting was attended by Deputy Governors Dr Michael Debabrata Patra, M Rajeshwar Rao, T Rabi Sankar, Swaminathan J and other Directors of the Central Board – Satish K Marathe, Revathy Iyer, Anand Gopal Mahindra, Venu Srinivasan, Pankaj Ramanbhai Patel and Dr Ravindra H. Dholakia. Ajay Seth, Secretary, Department of Economic Affairs and Dr Vivek Joshi, Secretary, Department of Financial Services, also attended the meeting.
Reacting on the same, Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA Ltd, said, “The amount of Rs 2.11 trillion is well above the budgeted figure of Rs 1.5 trillion in the Interim Budget for FY2025 under dividends and profits, which includes dividends from PSUs. The higher-than-budgeted RBI surplus transfer would help to boost the GoI’s resource envelope in FY2025, allowing for enhanced expenditures or a sharper fiscal consolidation than what was pencilled into the Interim Budget for FY2025. Increasing the funds available for capex would certainly boost the quality of the fiscal deficit. However, the additional spending may be difficult to be incurred within the 8-odd months left after the Final Budget is presented and approved by Parliament.”