Modi 3.0 To Get Necessary Financial Boost As RBI Approves Transfer Of Rs 2.1 Lakh Crore Dividend To Centre

The Reserve Bank of India (RBI) on Wednesday (22 May) approved a dividend payout of Rs 2.11 lakh crore for the central government, almost double the amount that was expected.

Swarajya earlier reported that the central government might get over Rs 1 lakh crore from the RBI. The dividend payout last year was Rs 87,416 crore, as per The Hindu.

This gives the necessary boost to the Narendra Modi government, which is most likely to begin its third innings after the Lok Sabha elections. Results will be declared on 4 June.

The decision regarding this was taken under the chairmanship of RBI Governor Shaktikanta Das at the 608th meeting of the Central Board of Directors of the RBI.

"The Board...approved the transfer of Rs 2,10,874 crore as surplus to the Central Government for the accounting year 2023-24," RBI said in a statement.

The RBI cited robust and resilient economy to declare that the Board has decided to increase the Contingent Risk Buffer (CRB) to 6.5 per cent for FY 2023-24, which was 6 per cent in previous year.

Last week, the RBI announced a significant reduction in the government's borrowing through Treasury Bills, cutting the funds the Centre would have raised through these short-term instruments by Rs 60,000 crore.

Additionally, the central bank implemented measures to ensure the success of an upcoming operation where the government plans to prematurely repay Rs 60,000 crore of earlier borrowings.

A key factor contributing to a large surplus transfer is the sharp increase in interest the RBI would have earned from its foreign exchange assets, driven by aggressive rate hikes by the US Federal Reserve over the past couple of years.