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RBI decides to pay Rs 28,000 crore to government as interim dividend
Feb-19-2019

In a bid to help the Centre stick to its fiscal roadmap, the Reserve Bank of India (RBI) has decided to pay Rs 28,000 crore to government as interim dividend in the half-year ended December 31, 2018 (RBI follows July-June financial year). This is the second successive year when the RBI will be transferring an interim surplus. This is in addition to Rs 50,000 crore surplus transfer announced by RBI in August 2018 for the financial year ending June 30, 2018. Of this, the RBI paid interim dividend of Rs 10,000 crore in March 2018 to support the government's fiscal position. RBI had given Rs 30,663 crore as dividend to the government in 2017-18.

The central bank transfers its surplus amount to the government, under Section 47 of the RBI Act, 1934. As per Section 47 of the Act, after making provision for bad and doubtful debts, depreciation in assets, contribution to staff and superannuation fund and for all matters for which provision is to be made by or under the Act or which are usually provided by bankers, the balance of the profits shall be paid to the central government. According to the Budget document, the government expects Rs 82,911.56 crore as dividend/ surplus of RBI, nationalised banks and financial institutions during 2019-20.

India’s fiscal deficit for 2018-19 will be 3.4 percent of gross domestic product (GDP), slightly higher than targeted 3.3 percent, on account of Rs 20,000 crore budgeted for income support to farmers. For 2019-20 too, the government has retained the fiscal deficit at 3.4 percent.


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