Union Finance Minister Nirmala Sitharaman, in her Budget 2025 speech on Saturday, February 1, pegged dividends from the Reserve Bank of India (RBI), nationalised banks and financial institutions (FIs) higher at ₹2.56 lakh crore.RBI DIVIDENDSThe Union Budget for the fiscal year FY25 presented on July 1, 2024, had accounted for dividends from the Reserve Bank of India (RBI), nationalised banks and financial institutions (FIs) at ₹2,32,874 crore (Budget Estimate) and ₹2.34 lakh crore as Revised Estimate, compared to ₹1,04,407 crore for FY24 (Revised Estimate), and ₹39,961 crore (actual) for FY23.The RBI had announced a record ₹2.11 lakh crore surplus transfer to the government for FY25, significantly higher than the ₹87,416 crore transferred in FY24. This exceeded both the Budget Estimate (which included dividends from banks and financial institutions) and market expectations of around ₹1 lakh crore.RBI’s dividend transfer to the government
Year
Amount (₹ crore)
FY13
33,110
FY14
52,679
FY15
65,896
FY16
65,876
FY17
30,659
FY18
50,000
FY19
176,051
FY20
57,128
FY21
99,122
FY22
30,307
FY23
87,416
FY24
2,10,874
Impact of higher dividend transfers from RBI, nationalised banksA higher-than-budgeted dividend transfer by RBI bodes well for India’s fiscal dynamics and could provide a boost to the government’s fiscal consolidation efforts. The government can take advantage of any larger-than-expected dividend transfer to reduce its dependence on market borrowings and help lower borrowing costs accordingly. Lower-than-expected borrowings by the government typically have a softening impact on yields as well. The government can also choose to deploy the additional resources for higher spending.
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