The Reserve Bank of
India approved paying a higher-than-expected Rs 99,122 crore to the government
as a dividend, providing cushion to the state at a time when a crippling second
wave of the novel coronavirus may strain public finances.
Photograph: Santosh Hirlekar / ANI Photo.
In a statement, the RBI
said its central board headed by Governor Shaktikanta Das has approved
transferring Rs 99,122 crore surplus (commonly called dividend payment) out of
the excess it generates from market operations, investments and printing of
currency, for the accounting period of nine months ended March 31, 2021.
The higher-than-expected
dividend or surplus transfer will aid the government in a year that may see
lower tax collections due to the pandemic.
"The board in its
meeting reviewed the current economic situation, global and domestic challenges
and recent policy measures taken by the Reserve Bank to mitigate the adverse
impact of the second wave of COVID-19 on the economy," the RBI said.
This is the highest
ever transfer by the RBI in a year after the Rs 1.76 lakh crore payout in the
2018-19 fiscal.
That year, the payment
included Rs 1.23 lakh crore as dividend and Rs 52,637 crore excess provisions
identified as per the revised Economic Capital Framework (ECF).
The payout exceeds the
2021-22 budget estimates of Rs 53,510.6 crore revenue from dividends by the RBI
and state-owned banks and financial institutions.
Just the surplus paid by
the RBI has surpassed that target by around Rs 45,611 crore.
For fiscal 2020-21, it was
revised downwards to Rs 61,826.29 crore, from the earlier estimate of Rs
89,648.51 crore.
The RBI had transferred Rs
57,128 crore as surplus to the central government for the accounting year
2019-20 (July 2019 to June 2020) but this isn't comparable with the current
payout because of a change in the accounting year.
The RBI this year changed
its accounting year to sync with April to March financial year.
The earlier years were for
the period July to June.
The payment this time
around is for a nine-month period.
Besides worry on tax
revenues, the government also has to generate a record Rs 1.75 lakh crore from
the sale of stake in state-owned firms.
The RBI also decided to
maintain a Contingency Risk Buffer at 5.50 per cent in line with recommendations
of the Bimal Jalan Committee report.
The panel had prescribed a
Contingency Risk Buffer range of 6.5 per cent to 5.5 per cent.
With the change in the
Reserve Bank's accounting year to April-March (earlier July-June), the Board
discussed the working of the RBI during the transition period of nine months
(July 2020-March 2021).
During the meeting, the
board approved the Annual Report and Accounts of the Reserve Bank for the
transition period.
"The Board also
approved the transfer of Rs 99,122 crore as surplus to the central government
for the accounting period of nine months ended March 31, 2021 (July 2020-March
2021), while deciding to maintain the Contingency Risk Buffer at 5.50 per
cent," the statement said.
The 589th meeting of the
Central Board was attended by Deputy governors Mahesh Kumar Jain, Michael
Debabrata Patra, M Rajeshwar Rao and T Rabi Sankar.
Other
directors of the Central Board, N Chandrasekaran, Satish K Marathe, S
Gurumurthy, Revathy Iyer and Sachin Chaturvedi also attended the meeting.
Debasish Panda secretary,
Department of Financial Services and Ajay Seth, secretary, Department of
Economic Affairs too attended the meeting.
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