RBI Gives Modi Govt. Massive Rs. 2.69 Lakh Crore Dividend
RBI Surprises with Record Dividend Payout
The Reserve Bank of India (RBI) just made a big splash, announcing a whopping dividend of Rs 2.69 lakh crore for the financial year 2025! This is a significant jump from last year’s Rs 2.1 lakh crore dividend, giving the Modi government a major boost in its efforts to bring down the fiscal deficit to 4.4 percent this year.
Why This Matters
This increased payout represents a 27.37 percent increase year-over-year. Remember that the government had budgeted for a smaller amount, anticipating just Rs 2.56 lakh crore from the RBI and other financial institutions. The RBI’s decision is a welcome surprise for the government, giving them extra funds to invest in infrastructure and support their economic plans.
RBI Boosts Contingency Buffer Too
The RBI also took the opportunity to increase its contingency risk buffer (CRB) to 7.50 percent, up from 6.5 percent previously.
The CRB acts as a safety net for potential financial troubles, such as bad loans or unexpected economic shocks. This increase shows the RBI is taking a cautious approach, especially considering the global economic uncertainties.
Behind the Big Numbers
So what’s driving this record dividend? The RBI has been doing some heavy lifting, selling a significant amount of its foreign exchange reserves. They were the biggest seller among Asian central banks in January, and estimates suggest they’ve sold over $125 billion since September 2024 when reserves peaked at $704 billion.
This, along with higher interest income and strong performance in foreign exchange operations, has led to the impressive surplus that the government will now benefit from.
Experts Weigh In
Economists were predicting a higher dividend payout, and they’re excited about the potential impact on the economy
“RBI’s FY25 dividend payout to the government is projected to increase, fuelled by higher income from forex reserve deployments due to elevated US treasury yields,” said a report by the ICICI Research team. “This boost is further supported by strong commissions from forex operations and interest income on government securities .”
This extra money from the RBI will help the government continue its ambitious infrastructure spending plans and provide much-needed support to the economy.
