The work of the Finance Minister, who will present the general budget for the current financial year in July, 2024, appears to be easy on the revenue front.
The reason is that on Wednesday (May 22), RBI has decided to transfer an amount of Rs 2,10,874 crore outright from its additional funds to the Central Government. This decision was taken in the meeting of the Central Board of RBI under the chairmanship of Governor Dr. Shaktikanta Das, which is the largest amount given by it to the government as dividend.
There has been a lot of controversy on this issue before
The issue of giving dividend to the central government from the surplus fund of RBI was quite controversial in the past. Former RBI Governor Dr. Urjit Patel had opposed this proposal of the government, due to which he had to resign. Later, the government constituted a committee under the chairmanship of former RBI Governor Dr. Bimal Jalan, on the basis of whose recommendations the process of giving dividend was started.
Also Read: Big Update for Tenant: People living on rent will have to pay 18% GST tax, details here
This is how RBI earns huge amount of money
RBI earns huge income from the business of buying and selling government securities, interest received on lending to banks and bonds etc. RBI keeps a part of it as Contingent Risk Buffer (CRB) for emergency situations. Dr. Jalan Committee had fixed the level of 5.5 to 6.5 percent for CRB. Now RBI has told that when the condition of the economy was not good due to the Covid epidemic, CRB was kept at 5.5 percent. Now the situation is much better, so it has been decided to increase the buffer level to 6.5 percent for the year 2023-24.
Apart from this, an additional amount of Rs 2,10,874 crore has been transferred to the Central Government. In the year 2018-19, an amount of Rs 1.71 lakh crore and in the year 2019-20, an amount of Rs 57,128 crore was given to the Center under this head. It has started playing an important role in the revenue collection of the Central Government. The noteworthy fact is that in the year of general elections, RBI has given a record dividend.
Will help in reducing the loss
It was expected that the Center would get a dividend of approximately Rs 1 lakh crore from RBI, but the actual amount is double this. Even in the interim budget presented on February 01, 2024, an adjustment of Rs 1.02 lakh was made as dividend from RBI. On this basis, Finance Minister Nirmala Sitharaman has calculated to keep the fiscal deficit at 5.1 percent in the year 2024-25. But with GST collection exceeding Rs 2.10 lakh crore in April 2024 and now huge dividend from RBI, it is expected that the fiscal management which had derailed after the Covid pandemic will now appear more agile. The level of fiscal deficit as a proportion of GDP may go down to below five percent.
The new government will get relief in June
Better estimates are coming in about the country’s economic growth rate than before, due to which the tax collection aspect is also expected to be better this year. In such a situation, RBI’s dividend will give a lot of comfort to the government coming to power in June. Industrialist Anand Mahindra is also a member of the RBI’s central board. He has written on social media that, “It was great to attend the central board meeting and I am with other directors in giving a record dividend. It should be noted that this record dividend amount has been given after increasing the CRB ratio from six percent to 6.5 percent. I thank the RBI Governor and all the others in his team. ”
