RBI’s ₹2.11 Lakh Crore Dividend to Help New Government Reduce Fiscal Deficit

A report by SBI highlights that the government’s fiscal deficit is expected to reduce by 30-40 basis points from the budgeted level of 5.1% of GDP. This follows the Reserve Bank of India’s (RBI) announcement of a record dividend of ₹2.11 lakh crore to the central government for the financial year 2023-24, signaling a significant reduction in the fiscal deficit.

“The declaration of a record dividend by the RBI today was well received by the financial markets, with benchmark yields softening to below 7%, indicating the positive impact of the highest ever surplus transfer. This is estimated to ease the fiscal deficit by 30 to 40 basis points from the budgeted level of 5.1% of GDP for FY25, as set in the Interim Budget,” the report stated.

Anand Mahindra, chairman of Mahindra Group, also attended the RBI meeting to approve the dividends. He shared in a social media post that the dividend transfer to the government has been approved, alongside an increase in the contingency risk buffer to 6.5% from 6%.

“I was very pleased to attend the @RBI board meeting earlier today and join with other directors to approve this record dividend. It’s important to note that this record amount was declared AFTER increasing the contingency risk buffer to 6.5 per cent from 6 per cent. I would like to compliment @DasShaktikanta & the entire team at the RBI for their diligent & judicious management of this vital institution” said Anand Mahindra, Chairman, Mahindra Group in a social media post.