Reserve Bank of India on Monday approved a transfer of Rs 1.76 lakh crores surplus to the government as dividend, the highest ever dividend doled out by the central bank in its history.

Share Market Live

NSE

The obvious next question is how the government will spend this money? Will the government announce a stimulus to help the economy revive its ‘animal spirits’?

The sense one gathers from North Block is "no". The government is looking to temper hopes of a big bang fiscal stimulus and officials in the know have told CNBC-TV18 that calibrated measures to boost the economy will continue, but while keeping fiscal deficit in mind.

DEA Secretary, Atanu Chakraborty explained, “The RBI surplus will flow into the Consolidated Fund of India and will be spent as per budgetary process on capex, revenue expenditure.”

Another senior government official told CNBC-TV18 that any talk of a fiscal package at this stage is mere “kite flying”. The official reasoned that the RBI surplus wasn’t sufficient for a fiscal stimulus.

It’s noteworthy that the government has already factored in Rs 90,000 crore from RBI as dividend in the budget. RBI has transferred Rs 1.23 lakh crore as dividend and Rs 52,637 crore as excess capital because contingency buffer as percentage of RBI’s balancesheet has been brought down to 5.5 percent, which is the lower range of the Jalan panel recommendation.

The government official also told CNBC-TV18 that one option of using the RBI dividend would be to improve fiscal parameters. He stressed that the government was committed to staying on the path of fiscal consolidation and achieving its tax revenue and divestment targets.

First Published:Aug 27, 2019 2:30 PM IST