RBI's ₹2 lakh-crore boost may help India's new govt have an easy-peasy run to achieve a goal
dividend announced by the Reserve Bank of India (RBI) may help the newly-elected Indian government meet the 5.1 per cent of GDP deficit target for the fiscal year ending March 2025 (FY25), said Fitch Ratings in its latest report on Monday.
It further stated that the dividend income could be used to lower the deficit beyond the current target.
The RBI on May 22 announced a record-high dividend transfer to the government, equivalent to 0.6 per cent of GDP (Rs 2.1 lakh) from its operations in FY24. The figure has surpassed the 0.3 per cent of GDP expected in the FY25 budget from February. Hence, the rating agency said that it will aid the authorities in meeting near-term deficit reduction goals.
Although the detailed breakdown by RBI is awaited, Fitch termed the higher interest revenue on foreign assets as a significant driver of the higher RBI profits.
The new government’s budget, following the release of election results in June, is likely to be presented in July and it will determine how the dividend will be used.
Govt aims to… The government had signalled its aim to narrow the deficit gradually to 4.5 per cent of GDP by FY26. RBI-led Monetary Policy Committee (MPC) member Ashima Goyal had said that she sees potential for a slight reduction in the targeted fiscal deficit for the current year, suggesting that India could comfortably achieve its fiscal consolidation goals.
«Sustained deficit reduction, particularly if underpinned by durable revenue-raising reforms, would be positive for India’s sovereign rating
