FinMin had budgeted for a surplus of Rs 45,000 crore for the current financial year. Therefore, a higher-than-estimated of Rs 5,000 crore would lead to a windfall for the Centre.
The Reserve Bank of India (RBI) will transfer surplus worth Rs 50,000 crore to the government, higher than what the Finance Ministry had budgeted for the financial year 2018-19.
The Finance Ministry had budgeted for a surplus of Rs 45,000 crore for the current financial year. Therefore, a higher-than-estimated of Rs 5,000 crore would lead to a windfall for the Centre.
“The Central Board of Directors of the Reserve Bank of India, at its meeting held on August 8, 2018, approved the transfer of surplus amounting to Rs 50,000 crore for the year ended June 30, 2018 to the Government of India,” the apex bank said in a release on Wednesday.
While the government follows April to March, the central bank follows a July-June accounting year.
In August every year, the RBI transfers it surplus—which is essentially an excess of income over expenditure—to the government, as under section 47 of the RBI Act, 1934.
The RBI had transferred funds from its surplus to the government in two tranches- Rs 30,659 in August last year, and Rs 10,000 in March, 2018.
The surplus that was transferred in August, 2017 was significantly lower than Rs 65,876 crore that was passed on for 2015-16. This was mainly due to a rise in cost on account of printing currency notes and liquidity management after the massive currency recall exercise of high-value notes that took place in November, 2016.
Last year, the Finance Ministry had budgeted a dividend transfer of Rs 58,000 crore. Constant persuasion for transfer of more funds as dividend resulted in Rs 10,000 crore from the apex bank.
A surplus from the RBI is a crucial source of revenue for the government and is earned under the head ‘non-tax revenue’, which mainly comprises dividends. A higher revenue would help the government meet its fiscal deficit target, especially at a time when the Centre is lagging behind in tax mop-up from GST.