Interim bailout (RBI's fresh dividend)

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 Interim bailout (RBI's fresh dividend)

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• Total Rs.68,000 crores from the RBI : The fresh announcement of Rs.28,000 cr interim dividend by RBI to GoI is on top of Rs.40,000 cr given earlier. Total receipts for fiscal 2018-19 is now Rs.68,000 cr.
• Fiscal deficit target 3.4% : The government is starved for funds, and this is a big support, if it is to hit the 3.4% fiscal deficit target.
• Last year : Total for 2017-18 was Rs.50,000 cr, and for 2018-19 it will be Rs.68,000 crores. As for interim transfers, for second year in a row it's being done (last year was Rs.10,000 cr).
• What does interim really mean : The shareholder (government of India) is asking the RBI to advance a receipt from the next fiscal to help itself (GoI) in the present year.
• What if RBI refuses next year? It will be a problem, as the government's Budget shows a receipt of Rs.82,911 cr for next fiscal on this account. And since the RBI is not a commercial company, one cannot really make "growth forecasts" on such issues. RBI does regulatory work.
• Large payout indeed : Given the conflicts between GoI and RBI (during Urjit Patel's time), this large payout is interesting.
• { The GoI had asked him to share the accumulated reserves with it. He had refused. }
• Suspicion of pressure : Many suspect that the GoI is pressuring the RBI, PSBs and other FIs on the interim dividend payments (and dividend payments) as the original estimate of Rs.54,817 core in 2018-19 Budget rose to Rs.74,410 crore in Interim Budget.
• ECF Committee : The Economic Capital Framework Committee under ex-Governor Bimal Jalan will hopefully give a final structure and put an end to all this. It will build a de-personalised structure for sharing RBI surplus with the government.
• Summary : The high interim dividend payout by RBI to GoI has raised eyebrows, and the ECF Committee under Bimal Jalan will hopefully build a structure to end all future speculation.

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