The RBI has declared a record dividend of ₹2.1 lakh crore to the Central government for FY24, a 141% increase from the previous year. This substantial amount significantly exceeds expectations and will aid in managing the fiscal deficit more effectively.
Last year, the RBI transferred ₹87,416 crore to the government, with a previous high of ₹1.76 lakh crore in 2018-19. Despite anticipating only ₹1.02 lakh crore from various financial bodies in the interim budget, the RBI’s increased profitability has allowed for this higher dividend.
The record dividend follows the RBI’s decision to raise its contingency risk buffer to 6.5%, ensuring robust financial health. This increase comes amidst higher earnings from its forex operations, influenced by the US Federal Reserve’s interest rate hikes.
This substantial dividend not only suggests effective fiscal management by the RBI but also provides the government flexibility in reducing the fiscal deficit, which is targeted to drop to 5.1% of GDP by FY25, aided by strong tax collections.
The additional funds from the dividend could support increased capital expenditures in the upcoming Union Budget FY25, potentially stimulating private investment and fostering economic growth, offering a substantial fiscal advantage to the incoming Cabinet.
