The Reserve Bank (RBI) on Monday said it will give Rs 28,000 crore to the government as interim dividend. The decision was taken at the meeting of the RBI's Central Board in New Delhi. "Based on a limited audit review and after applying the extant economic capital framework, the Board decided to transfer an interim surplus of Rs 280 billion to the central government for the half-year ended December 31, 2018," the central bank said in a statement.
This is the second successive year that the Reserve Bank (RBI) will be transfering an interim surplus. Earlier, Finance Minister Arun Jaitley addressed the post-Budget meeting of the Central Board. Jaitley in his address broadly outlined the various reforms and policy measures taken by the government over the last four years and the effects thereof.
Recently, Governor Shaktikanta Das had said it was legitimate for the government to demand an interim dividend from the Reserve Bank as it's part of the statutes and use it the way it wants.
Das, who joined the central bank after the surprise resignation of Urjit Patel following differences with the government, was replying to a question on the impact of the impact of the Rs 6000-per annum cash payout to around 120 million farmer households on the fiscal numbers and how serious is the farmers' distress according to the central bank's assessment.
This was the maiden monetary policy review announced under his chairmanship.
Be it the impact of the Rs 6,000 cash transfer to 120 million poor farmer households that too retrospectively from December 2018--leading to an over Rs 20,000 crore outgo this fiscal this year; or the massive tax-breaks to the middle- class, shaving off another Rs 22,000 crore-plus of tax revenue, or the questions about the "hygiene" of the fiscal deficit as the interim budget document which should have been just a vote-on-account contains lots of off-budget measures.
The poll-bound BJP government's move to offer cash to 120 million farmer families was criticized by many as a way to buy peace with the farmers who are severe financial distress the money for which would be met by an interim dividend of Rs 28,000 crore from the RBI.