RBI approves transfer, but would it ease govt’s fiscal?

Reserve Bank of India on Friday approved dividend of ₹57,128 crore to government. But the question still is unanswered, even if RBI approves transfer, but would it ease govt’s fiscal?

1
15
RBI approves transfer
RBI approves transfer

The RBI Central Board approved the transfer of ₹57,128 crores as surplus to the Central Govt for the accounting year 2019-20 while deciding to maintain the Contingency Risk Buffer at 5.5%. Reserve Bank of India on Friday approved a dividend of ₹57,128 crores to the government. But the question still is unanswered, even if RBI approves the transfer, but would it ease govt’s fiscal?

The Board decided to maintain the Contingency Risk Buffer at 5.5%. The Board reviewed the current economic situation, continued global and domestic challenges, and the monetary, regulatory, and other measures taken by RBI to mitigate the economic impact of COVID-19 pandemic. The Board discussed the proposal of setting up an Innovation Hub. The Board discussed various areas of operations of the Bank during the last year and approved the Annual Report and Accounts of the Reserve Bank for the year 2019-20. The Board also approved the transfer of ₹57,128 crores as surplus to the Central Government for the accounting year 2019-20, while deciding to maintain the Contingency Risk Buffer at 5.5%.

Last year the RBI’s board approved a record payment of ₹1.76 trillion to the government, which included ₹1.23 trillion as dividend and ₹52,640 crores from its surplus capital. The government had budgeted a dividend of ₹ 60,000 crores from the central bank and other state-run financial institutions. But RBI approves the transfer, but would it ease govt’s fiscal?

As the manager of government finances, the central bank pays the government a dividend each year to help it meet its financial targets. The receipt from various sources – including dividends from the central bank – helps the government meet its fiscal deficit target. The fiscal deficit is expected to widen due to COVID-19-affected tax collections and the front-loading of spending by the government, according to economists. Even though the entire nation is gearing towards revamping the economy. However, the question still lurks – even if RBI approves the transfer, but would it ease govt’s fiscal?

Related: Rise of Online Gyms During Lockdown

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here