RBI declares record ₹2.1 lakh crore dividend for FY24

The Reserve Bank of India (RBI) has declared a record-breaking dividend of ₹2.1 lakh crore for the Central government for the fiscal year 2024. This amount significantly exceeds market expectations of ₹80,000 to ₹1,00,000 crore and marks an increase of approximately 141% from the previous year's payout.

The RBI's dividend for fiscal 2022-23 was ₹87,416 crore, with the previous high being ₹1.76 lakh crore in 2018-19. This substantial dividend will assist in managing the fiscal deficit more effectively and provide the government with greater flexibility in its expenditure.

In the interim budget for the current fiscal year, presented on February 1, the government had anticipated a dividend of ₹1.02 lakh crore from the RBI, public sector banks (PSBs), and other financial institutions. Despite the RBI raising its contingency risk buffer (CRB) to 6.5% from the previous 6%, the highest within the recommended range of 5.5-6.5% (as suggested by the Bimal Jalan Committee), the record-high dividend has been announced.

The interim budget aims to reduce the fiscal deficit to 5.1% of GDP in FY25 from 5.8% in FY24. Initially, this target was deemed ambitious by some analysts. However, with tax collections exceeding revised projections for FY24, the government is well-positioned to improve upon these fiscal deficit projections.