The Reserve Bank will pay an interim dividend of Rs 28,000 crore to the government, a move that will help the Centre keep fiscal deficit in check. The announcement on Monday came after the bank's Central Board meeting, which was addressed by Finance Minister Arun Jaitley.
This is the second successive year when the Reserve Bank of India (RBI) will be transferring an interim surplus. This is in addition to Rs 50,000 crore surplus transfer announced by RBI in August 2018 for 2017-18 (RBI follows July-June financial year). Of this, Rs 10,000 crore was given as interim dividend to the government on March 27, 2018.
"Based on a limited audit review and after applying the extant economic capital framework, the Board decided to transfer an interim surplus of Rs 280 billion to the central government for the half-year ended December 31, 2018," the central bank said in a statement. RBI had given Rs 30,663 crore as dividend to the government in 2017-18.
In his address to the Board, Jaitley outlined various reforms and policy measures taken by the government over the last four years and the effects thereof. The central bank transfers its surplus amount to the government, under Section 47 of the RBI Act, 1934.
Section 47 of the Act says:"After making provision for bad and doubtful debts, depreciation in assets, contribution to staff and superannuation fund and for all matters for which provision is to be made by or under the Act or which are usually provided by bankers, the balance of the profits shall be paid to the central government.” As per the Budget document, the government expects Rs 82,911.56 crore as dividend/ surplus of RBI, nationalised banks and financial institutions during 2019-20.
The statement further said the Central Board, chaired by RBI Governor Shaktikanta Das, also observed two minutes silence as a mark of respect for the security personnel killed in the terror attack at Pulwama, Jammu and Kashmir. Fiscal deficit for 2018-19 is expected to be slightly higher at 3.4 per cent of the GDP on account of Rs 20,000 crore budgeted for income support to farmers.
For 2019-20 too, the government has retained the fiscal deficit at 3.4 per cent.