India: Government may seek INR300bn interim dividend from RBI

  • The government may seek an interim dividend of about INR300bn from the RBI towards the end of the financial year to meet its fiscal deficit target of 3.3% of GDP for 2019-20, sources said.
  • Government finances have come under pressure due to moderation in revenue collection and a slew of measures taken to lift growth from a six-year low of 5% in 2Q19.
  • Apart from the RBI dividend, there are other means of bridging any shortfall, including mop up from disinvestment and higher utilisation of National Small Saving Fund (NSSF), sources added.
  • In the past, the government has taken the route of seeking interim dividend from the RBI to balance its account. In FY19, the RBI paid INR280bn as interim dividend.
  • In FY18, the government received INR100bn as interim dividend from the central bank.
  • Even with regard to the Goods and Services Tax (GST), the all-powerful GST Council approved reduction in many items with impact on the exchequer.

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