RBI to Pay Highest Ever Dividend of 2.11 Lac Crores to Centre for FY25, 141% Surge....
On Wednesday, in the 608th meeting of the RBI, a dividend of Rs 2.11 lakh crore was finally approved to Central Government. This is the highest ever dividend of RBI, which is 141% more than last year's dividend of Rs 87,416 crore. Highest Ever Dividend crossed Bloomberg's estimated benchmark of Rs 1 lakh crore.
Highest Ever Dividend of 2.11 Lac Crore to Centre
In the 608th meeting of the Reserve Bank of India held in Mumbai on Wednesday under the Chairmanship of Shri Shaktikant Das, RBI Proclaimed to give a dividend of Rs 2.11 lakh crore to the Government of India.The yield on 10-year government bond fell 3 basis point to 7.05% following the news of higher dividend.
141% Surge in Dividend as of Previous year
This time the dividend is 141% more than last year's dividend. Last year RBI had declared a dividend of Rs 87,416 crore. This dividend of Rs 21067.4 crores of RBI will prove helpful in achieving its deficit target of 5.1% by FY25.
The RBI in its Official Statement on the Website marked that,
"The Board...approved the transfer of ₹2,10,874 crore as surplus to the Central Government for the accounting year 2023-24," RBI said in a statement.
Highest Ever Dividend of RBI crossed Benchmarks of Bloomberg
In comparison to the Highest Ever Dividend, last year's dividend of Rs 87,420 crore is being earned. A poll conducted by Bloomberg had estimated that RBI's surplus dividend this year would be around Rs 1 lakh crore - However, RBI crossed Bloomberg's expected figure and provided double its dividend to the government.
The Expert Economists at Bank of Baroda in a statement Stated,
"Overall, this is likely to have a positive impact on government yields. We expect 10Y yield to go below 7% in the coming months. Front Loading by FPIs due to inclusion in the global bond index will further lend support," said economists at Bank of Baroda in a note.
Multiple Benefits to Central Government
The Indian Government will get multiple benefits from the increased dividend received from RBI, this will help the Government in compensating the revenue received from disinvestment and other income. Along with this, the Government will also get support in making a gross borrowing of Rs 14.13 trillion in the fiscal year 2025, which will help in reducing the cost of borrowing.
A Glance at Central Bank's 608th Meeting
"functioning of the Reserve Bank..."
In the meeting, the Board discussed the Global and Domestic Financial Scenario, which also includes unforeseen situations that may occur in the future. In the meeting, the Board also discussed the, "functioning of the Reserve Bank" from March 2023 to March 2024 and also approved Annual Analysis and Financial Statements.
"Owning to the Prevailing Macroeconomic..."
During accounting years 2018-19 to 2021-22, owing to the prevailing macroeconomic conditions and the onslaught of Covid-19 pandemic, the Board had decided to maintain the CRB at 5.50 per cent of the Reserve Bank’s Balance Sheet size to support growth and overall economic activity.
"As the economy remains robust and resilient.."
"With the revival in economic growth in FY 2022-23, the CRB was increased to 6.00 per cent. As the economy remains robust and resilient, the Board has decided to increase the Contingency Risk Buffer CRB to 6.50 per cent for FY 2023-24. The Board thereafter approved the transfer of ₹2,10,874 crore as surplus to the Central Government for the accounting year 2023-24."
What Experts are Stating over this Highest Ever Dividend ?
Vivek Kumar Experienced Economist stated,
It is an excellent step by RBI. It will certainly help in achieving the government the glide path of FD and the government in improving infrastructure and development," said Vivek Joshi, secretary of Department of Financial Services stated by Vivek Kumar, Experienced Economist at QuantEco Research.
Buffer of 0.4% for the Fiscal Deficit
This would offer the next government greater flexibility to spend as Stated by Experienced Economist, Vivek Kumar. Economist Vivek Kumar explains the reasoning behind his statement and says that this dividend will provide a buffer of 0.4% for the fiscal deficit to GDP for fiscal year 2025. If everything else goes on at the projected pace, the fiscal deficit could surge to 4.7%, meaning the government will have more flexibility to spend. Marked, "
Teressa John, Economic Expert at Nirmal Bang
"Foreign securities part on the RBI's balance sheet has grown quite significantly over the last year, and the interest rates on these securities are also higher because global interest rates remained elevated. It is possible that it could have contributed to substantial weight to higher dividend,"
"although the losses were less than expected..."
John Economist at Nirmal Bang Securities Limited, In his statement, said that the slowdown in the return on government bonds in the country in the financial year 2024 helped the Central Bank Reserve Bank (RBI) to offset losses on rupee securities due to market volatility. In the case of foreign securities, losses were expected due to a significant increase in global yields, although the losses were less than expected. These were the two unexpected aspects that were mentioned.
"Highest Interest rates on Domestic and Foreign Securities", Bharadwaj Marked
"limited drag from liquidity operations.."
"Higher interest rates both on domestic and foreign securities, significantly high gross sale of FX along with limited drag from liquidity operations compared to the previous year have probably led to such a whopping dividend," Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank said in a mailed statement.
"Scope for lower borrowing being announced..."
"Positively, this comes with the contingency risk buffer being kept at the higher end of the statutory requirement. We expect such a windfall to help fiscal deficit ease by 0.4% in FY25. Scope for lower borrowing being announced in the upcoming Budget will now provide significant respite to the bond markets," Bhardwaj further added.
Click Here : 200 kmph Speeding Teen Driver's Porsche hit Motorcycle, Killed 2 24 years IT Graduate
Click Here : Telstra Fired 28,00 Employees, tenth of its Workforce, cited "Ongoing Inflationary pressures"
Click Here : Foreign Exchange Reserve hits $ 648.7 Billion, a surge of $ 4.54 Billion, Gold Reserve...
Comments
Post a Comment