RBI’s Record Dividend Boosts Government’s Fiscal Position: Finance Secretary TV Somanathan

In a significant development for India’s fiscal health, the Reserve Bank of India (RBI) has approved a record dividend payout of ₹2.1 lakh crore to the government for the fiscal year ending March 31, 2024. Finance Secretary TV Somanathan on Wednesday highlighted the positive impact of this dividend on the government’s fiscal position.

The substantial dividend, which exceeds estimates by 0.3% of the gross domestic product (GDP), marks a critical boost to the government’s financial reserves. The Finance Secretary emphasized that while cash inflows can be transient, revenues in any form, including dividends, contribute to the government’s financial robustness.

“The RBI dividend topping estimates is indeed good for the fiscal position of the government. Such inflows, although sometimes temporary, add significant strength to our financial standing,” Somanathan stated.

Additionally, addressing potential buyback programs for bonds, Somanathan noted that any decision to initiate such programs would depend on the attractiveness of yields. He expressed confidence that in scenarios of tight liquidity, the government would likely receive favorable offers for its bonds, thereby managing liquidity effectively.

The decision to transfer the surplus was approved during the 608th meeting of the Central Board of Directors of the RBI, chaired by Governor Shaktikanta Das. The central bank’s statement confirmed the transfer of ₹2,10,874 crore as surplus to the central government for the accounting year 2023–24.

This dividend payout surpasses the previous high of ₹1.76 lakh crore transferred in 2018-19 and is significantly higher than the ₹87,416 crore transferred for the fiscal year 2022–23. The government had budgeted a receipt of ₹1.02 lakh crore as dividends from the RBI, public sector banks, and financial institutions for the fiscal year 2024–25.

The Finance Secretary’s comments and the substantial dividend payout underscore the improved fiscal outlook for the government, which is poised to leverage these funds for various developmental and economic stability initiatives.

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