The central government is set to receive a-Rs 1.76 Lakh Crore bonanza from Reserve Bank of India (RBI) after facing a revenue shortfall and uncertainty over a planned sovereign bond issue. The Apex Bank of India (RBI) has decided to transfer this huge amount to the government this fiscal, the central bank said after a board meeting.
The RBI board, headed by governor Shaktikanta Das approved the transfer of 1, 76,051 to the center on Monday after the meeting in Mumbai. This includes Rs. 1,23,414 crore of surplus or dividend for the year 2018-19 and Rs. 52,637 crore of excess provisions- a onetime transfer which is also a first for the central bank.
For the first time, RBI is transferring a surplus reserve and the largest amount in the history of the bank. During the session of 2017-18, the surplus was 50,000 core while in 2016-17 it was 30,659 crore.
As per sources, the surplus transfer was finalized after the recommendations of the Bimal Jalan committee who was the former central bank governor. RBI’s central board accepted all the recommendations of the committee.
Madan Sabnavis, chief economist at CARE Ratings said, “It is a surprise to a certain extent because we had expected it to be a staggering payment to the government instead of everything in one shot. The budget expected a ₹90,000 crore surplus transfer and this extra ₹80,000 crore, to my mind, will act as a cushion against the possible shortfall in revenue collection in FY20."
“Jalan committee has given a range of 5.5-6.5% for Contingent Risk Buffer. My worry is all governments will work at the lower range of 5.5% like they have done it for this year. It does not give RBI very much space to maneuver. Keeping RBI at the rock-bottom level is not a sensible idea, but I am afraid that is what is going to happen," said Pronab Sen, former chief statistician of India.
