The ratings agency Fitch said on Monday that the record-high dividend transfer by the RBI to the government is equivalent to 0.6% of GDP.
It is further said that such a high level of dividends as a percentage of GDP is unlikely to be maintained.
Notably, the board of the Reserve Bank of India (RBI) last week decided to transfer a record Rs 2.1 trillion dividend to the government out of the profits earned in fiscal 2023–24.
This is more than the double of Rs 1.02 trillion that was budgeted by the government. An important driver of higher RBI profits appears to be higher interest revenue on foreign assets, though the central bank has not yet provided a detailed breakdown.
Fitch said, “The RBI recently announced a record-high dividend transfer to the government equivalent to 0.6% of GDP (Rs 2.1 trillion) from its operations in FY24. This is above the 0.3% of GDP expected in the FY25 budget from February, so it will aid the authorities in meeting near-term deficit reduction goals.”
The rating agency said this in a statement.