A young man walks past the entrance of the Reserve Bank of India headquarters in Mumbai on November 17, 2021. India's central bank on Wednesday raised its key lending rate from record lows in a bid to curb rising inflation, shock markets and slow the economy. The benchmark 10-year bond yield hit its highest level in three years.
Punit Paranjpe | AFP | Getty Images
India's central bank board approved a record 2.11 trillion rupee ($25.35 billion) surplus transfer to the government for the fiscal year ending in March, significantly higher than analysts and government expectations. .
As per the preliminary budget estimates for the financial year 2024/25, the government had budgeted a dividend of Rs 1.02 trillion from the Reserve Bank of India, state-run banks and other financial institutions.
In FY23, RBI transferred Rs 874.16 billion to the government.
Garima Kapur, economist and senior vice president at Elara Capital, said higher interest earned on securities held by the Reserve Bank of India could have boosted overall income, leading to higher transfers to the government. He said there is.
“This gives the government significant leeway to manage welfare spending and maintain capital investment, even if disinvestment falls short,” she added.
The RBI Board also decided to increase the Contingency Risk Buffer (CRB) to 6.5% from the previous 6%.
Analysts had expected the remittance surplus to be in the range of 750 billion to 1.2 trillion rupees, supported by strong foreign exchange earnings.
“As the economy remains strong and resilient, the Board has decided to increase the CRB to 6.50 per cent for FY 2023-24,” the RBI said in a statement.
India's benchmark 10-year bond yield fell 4 basis points to 7.00% after the announcement.
The bank's board has considered global and domestic economic scenarios, including risks to the outlook, the statement added.
