Demonetisation effect: RBI’s dividend to Government falls to Rs 30,659 crore

The halving of dividend by the Reserve Bank is going to upset the government's finances.

In a move likely to hurt the Finance Ministry’s Budget arithmetic, the Reserve Bank of India has halved its dividend payment to the government to Rs 30,659 crore for the year ended June 2017.

Decided by the central board of directors, the dividend amount is less than half of Rs 66,000 crore transferred to the government in each of the previous two years.

The lower dividend is due to huge expenses borne by the Reserve Bank by way of interest payment to banks as part of its liquidity management exercise and in printing notes post demonetisation, as per a TOI report.

"The lower amount will be a concern since the government's non-tax receipts will be affected. In the Budget, it was assumed that around Rs 75,000 crore would come from RBI, public sector banks (PSBs) and financial institutions compared with a little over Rs 76,000 crore in FY17," TOI quoted Madan Sabnavis, chief economist, CARE Ratings as saying.

"If other conditions remain unchanged, the fiscal deficit can increase from 3.2 per cent to 3.4 per cent this year," he added.

Source: TOI

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