The Reserve Bank of India is reportedly expected to pay up a dividend of nearly $12 billion to the Centre, aiding New Delhi in its budget deficit target.
The dividend, if it happens, will mark the highest payout in five years. According to a Bloomberg report, a meeting of RBI's board of directors is set to convene this week and is expected to approve a dividend. A larger dividend payout is projected to assist the government in meeting its fiscal deficit target of 5.1% of GDP for the current financial year. It would also bolster revenues for any new administration following the general elections next month, providing greater flexibility for public spending.
Teresa John, an economist with Nirmal Bang Institutional Equities, stated that a substantial surplus transfer would help the government address any shortfall in disinvestment receipts and fund welfare plans post-elections.
The finance ministry is also likely to raise the CPSE dividend estimates by Rs 5,000 crore to around Rs 53,000 crore for the current fiscal in the full budget to be presented in July. In the interim budget 2024-25, the government had pegged dividend estimates from non-financial central public sector enterprises (CPSEs) at Rs 48,000 crore for the current fiscal. "The estimates may go up by about Rs 5,000 crore in the final budget to be presented in July," an official said.
The interim budget estimates were based on the estimates in December 2023, and January 2024, and the estimates in the full budget will be higher as we have a better picture of the dividend now.