By Anjana Das
New Delhi, Jan 21 (IANS) The Finance Ministry is likely to push for Rs 25,000-30,000 crore interim dividend from RBI, for the third time in a row, to check slippages in the fiscal deficit of 3.3 per cent in 2019-20.
The central bank and government may touch upon the issue when Finance Minister Nirmala Sitharaman will meet RBI Governor Shaktikanta Das at post Budget Vision customary meeting.
Government has a Budget estimate of Rs 90,000 crore dividend from RBI in FY20. RBI follows a fiscal of July-June. The interim dividend of the RBI’s total dividend for 2019-20 (July-June) can help the government check 3.3 per cent fiscal deficit target slippage.
In the past RBI has paid a total Rs 38,000 crore as interim dividend (Rs 28,000 crore in FY19 and Rs 10,000 crore in FY18).
“If the RBI board recommends, then it will be the third time when interim payout will be given to the government,” said sources.
The central bank had paid Rs 28,000 crore as interim dividend from its 2018-19 fiscal accounts (July-June) in February, which helped the government contain deficit at 3.4 per cent in the last fiscal.
The Reserve Bank follows July-June financial year and usually distributes the dividend in August after annual accounts are finalised and interim dividends if any, they are given around February to the government.
Seeking interim dividends are not common. The Bimal Jalan-led committee on the RBI’s economic capital framework recommended in August that an interim dividend should be paid to the government only in “exceptional circumstances”.
The Finance Ministry’s contention is that this year has “exceptional circumstances” because of the slowdown, low revenue generation and outgo of Rs 1.45 lakh crore due to corporate tax cuts.
For 2018-19 (July-June), the RBI transferred a total of Rs 1.76 trillion to the central government, including a one-time transfer of Rs 52,637 crore which was deemed as excess reserves and comprising Rs 1,23,414 crore of surplus for the year 2018-19.
The government is fighting a six year low growth, subdued demand and consumption leading to projections of 5 per cent growth in current fiscal which is an 11 year drop.
On Monday, the International Monetary Fund (IMF) slashed India’s FY20 growth forecast to 4.8 per cent, besides trimming global outlook and said India’s slow growth is dragging down the world economy.
The Finance Ministry might seek the interim dividend from the RBI to meet some of the financial pressure due to the low revenue generation from taxes and disinvestment and slowdown, said the sources.
The RBI largely earns profits on its trading of currencies and government bonds. Part of these earnings are set aside by the RBI for its operational and contingency needs while the rest is transferred to the government in the form of dividends.
The Union Budget 2019-20 had pegged dividend or surplus of the RBI, nationalised banks and financial institutions at Rs 1.06 lakh crore up from Rs 74,140.37 crore realised in the previous fiscal.
(Anjana Das can be contacted at [email protected])