The Reserve Bank of India (RBI), having changed management last month following a clash with the government, is likely to transfer an interim dividend of Rs 30,000-40,000 crore to the government by March, according to three sources with direct knowledge of the matter.
The dividend could help Prime Minister Narendra Modi’s administration bridge a widening budget deficit following a drop in tax collections, and would come after the government pushed the RBI for the additional funds ahead of a national election due by May.
The government and RBI have now appointed a panel to look into the issue around the sharing of the RBI’s reserves.
“We are absolutely sure that an interim dividend of more than Rs 30,000 crore would be paid before March-end,” one of the sources told Reuters.
The RBI did not respond to an email seeking comment, while the finance ministry declined to comment.
The funds are crucial to meet the fiscal deficit target of 3.3 per cent of the GDP for the financial year ending in March, as the government’s revenue shortfall may be as high as Rs 1 lakh crore, according to two finance ministry officials who declined to be named.
The RBI could make a final decision on the dividend by the time Finance Minister Arun Jaitley presents the government’s budget on February 1, the sources said.