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<br /><ul><li>RBI is giving the government 67% less money than it did last year</li><li>The government is already pumping money out to address the fallout of the coronavirus pandemic.</li><li>The lacklustre amount is unlikely to be enough to address the government’s budgetary concerns.</li></ul>The <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (RBI) has doled out half a billion rupees as surplus to the Indian government but it won’t be nearly enough to bridge the <keyword id="1000311" type="PERSON" weightage="20" keywordseo="budget-gap">budget gap</keyword>. This year’s annual payout from the RBI to the Indian government was a lacklustre ₹57,128 crore ($7.62 trillion). The payment is only one-third of what RBI shelled out last year.<br /><br /><div type="image" title="RBI annual allocation" msid="77546468" hostid="261" caption="&amp;lt;p&amp;gt;RBI&amp;#39;s annual allocation over the past five years&amp;lt;/p&amp;gt;"></div><br />In 2019, the RBI allocated a record ₹1,76,000 crore ($23.5 billion), which was mostly made up of the dividend payout — only ₹52,640 crore was surplus capital. <br /><br /><div type="image" title="snapshot-1597408467844" msid="77546493" hostid="261" caption="&amp;lt;p&amp;gt;Division of last year&amp;#39;s annual allocation by the RBI&amp;lt;/p&amp;gt;"></div><br />India’s central bank hit the lower end of expectations with analysts forecasting this year’s allocation to be anything from <a href="https://theprint.in/economy/modi-govt-awaits-rbi-dividend-but-it-wont-help-plug-revenue-hole-created-by-covid/481350/">₹40,000 crore to ₹ 1,00,000 crore. </a>One of the factors that dictated the low payout is that 5.5% has been set aside as a ‘contingency risk buffer’.<br /><br />The government was hoping for more capital to bridge the budgetary gap caused by the coronavirus pandemic. This includes lower tax realisation, higher expenditure on healthcare and overall disruption to pre-COVID activities. <br /><br />The RBI, on the other hand, is falling short of its revenue projections with the Indian economy poised to contract for the full year in more than four decades. <br /><br />Not that the surplus capital is unlikely to help with the government’s needs, some of the other options it has on hand are withdrawing more cash out of the central bank, selling state assets or increasing borrowing — something that’s already at a record high. <br /><br />The fiscal deficit was already at ₹4.66 lakh crore — or 58.6% of the budget estimate — within the first two months of the current financial year. <br /><br /><br />

RBI’s annual surplus to the government this year is only one-third of what it was last year

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RBI’s annual surplus to the government this year is only one-third of what it was last year

Prabhjote Gill

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