Reserve Bank of India (RBI) has approved the transfer of record Rs 1.76 lakh crore dividend and surplus reserves to the government, boosting Prime Minister Narendra Modi-led regime’s prospect to stimulate the slowing economy without widening fiscal deficit.
Governor Shaktikanta Das-led RBI central board gave its nod for transferring to the government a sum of Rs 176,051 crore comprising Rs 123,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF), the apex bank said in a statement.
The excess reserve transfer is in line with the recommendation of former RBI governor Bimal Jalan-led panel constituted to decide size of capital reserves that the central bank should hold.
The government was represented by finance secretary Rajiv Kumar in the panel which finalised its report on August 14 by consensus.
The receipts from the RBI will give a fillip to the government’s efforts to boost the economy from a five-year low.
Finance Minister Nirmala Sitharaman had last week announced a slew of measures to prop up growth even as the government tried to stick to the target of keeping fiscal deficit at 3.3 per cent of the GDP.
The additional cash will now give the Centre more headroom for stimulating the economy.
The Modi government and the RBI under its previous governor Urjit Patel had been at loggerheads over the optimum level of surplus capital with the central bank.