Amid falling tax collections and burgeoning fiscal deficit, the central government will get ₹57,000 crore from India’s central bank, the Reserve Bank of India (RBI).
The RBI on Friday (August 14) approved a dividend of ₹57,128 crore to the Centre for the fiscal year 2019-20. The amount is much less than the over ₹1.7 lakh crore the central bank had paid last year.
The payout, lower than the government’s estimate of ₹60,000 crore may not be of much help to the government, whose finances have been battered by the heavy-lifting needed to support the economy to tide over the economic crisis caused by COVID.
Prime Minister Narendra Modi had on May 12 announced a ₹20-lakh crore package to help the poor and revive various sections of the economy hit hard by the complete lockdown announced to deal with coronavirus.
A stalled economy hurt the government’s tax collections, which resulted in the fiscal deficit to shoot up to over ₹6.6 lakh crore in the three month period ending in June, which was over 83% of the 3.5% fiscal deficit budgeted for the whole of FY21.
Many experts believe that the fiscal deficit will more than double to about 7.5% as the country’s GDP is expected to contract the first time in four decades. Studies have estimated that the economy will shrink by about 5.3%.
Last year, the central bank had paid a record ₹1.76 lakh crore after it adopted a new capital framework to decide on the dividend to be paid as per the recommendations of the Bimal Jalan Committee.