The Reserve Bank of India (RBI) has sanctioned its highest-ever dividend payout of Rs 2.11 lakh crore to the central government for the fiscal year 2023-24. This decision is poised to significantly enhance fiscal deficit management. Surpassing the previous record of Rs 1.76 lakh crore in 2018-19, this allocation underscores a substantial increase in financial support. The decision was reached during the 608th meeting of the RBI's Central Board of Directors, chaired by Governor Shaktikanta Das.
This development aligns with the government's strategic goal of containing the fiscal deficit to Rs 17.34 lakh crore (5.1 per cent of GDP) for the current financial year. The government's budget projection for 2024-25 anticipates a dividend income of Rs 1.02 lakh crore from the RBI and public sector financial institutions.
The RBI board extensively deliberated on both global and domestic economic landscapes, carefully assessing risks to the growth outlook. Furthermore, it conducted a comprehensive review of the Reserve Bank's performance during the fiscal year 2023-24, granting approval for its Annual Report and Financial Statements.
During the discussion, the RBI emphasized its proactive response to macroeconomic conditions and the challenges posed by the Covid-19 pandemic from 2018-19 to 2021-22. During this period, it maintained the Contingent Risk Buffer (CRB) at 5.50 per cent of its balance sheet size to bolster economic growth. With the resurgence of economic activity in FY 2022-23, the CRB was raised to 6.00 per cent. Now, in recognition of the economy's robustness and resilience, the Board has decided to elevate the CRB to 6.50 per cent for FY 2023-24.
The determination of the transferable surplus for 2023-24 was guided by the Economic Capital Framework (ECF) adopted by the RBI in August 2019, following recommendations from the Bimal Jalan-headed expert committee. The committee advised maintaining risk provisioning under the CRB within a range of 6.5 to 5.5 per cent of the RBI's balance sheet.
