Indian two thousand and five hundred rupee banknotes are arranged for a photograph in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Union Budget 2018: Government Expects More In Dividend From RBI

The government still expects more dividend from the Reserve Bank of India, over and above the Rs 30,659 crore already released by the central bank, as it stares at a revenue shortfall in the ongoing financial year.

“As per the RBI surplus”, the government kept the dividend target “around Rs 40,000-42,000 crore”, Economic Affairs Secretary Subhash Chandra Garg told BloombergQuint. That’s part of the Rs 51,623 crore dividend it had budgeted from the central bank, nationalised banks and financial institutions for the year ending March.

RBI’s dividend for 2017-18 halved to Rs 30,659 crore from the previous year on printing of new currency notes after the demonetisation of high value currency notes announced by Prime Minister Narendra Modi in November 2016. The government has already breached the fiscal deficit target for this fiscal. It had sought an additional dividend of Rs 13,000 crore from the RBI to bridge the gap.

In the budget for 2018-19, the government estimated a dividend of Rs 54,817 crore from the RBI, nationalised banks and financial institutions. Garg said the government kept the estimates lower in the spirit of realistic estimation. He hoped that public sector banks turn around next year and start paying dividends.