RBI DIVIDEND
Budget Preview: Govt could use part of RBI dividend to reduce fiscal deficit, says Motilal Oswal
A transfer of Rs 2.11 lakh crore by the RBI implies excess receipts of about Rs 1.5 lakh crore in FY25, the MOFSL note said. MOFSL sees the new government largely retaining its tax and non-debt capital receipt (including disinvestment) projections as presented during the interim Budget in February.
CII pitches for marginal tax relief for individuals, higher wages under MNREGA in Budget
CII also suggested that the government may use a part of the Rs 2.11 lakh crore RBI dividend to boost capital spending by 25 per cent in FY25. This will help to maintain the upward trajectory of public capex and crowd-in-private capex by reinvigorating economic activities and creating demand.
Budget likely to stick to fiscal road map: UBS
UBS predicts that the new government will follow a medium fiscal consolidation path but with a populist tilt in its first budget after the elections. The RBI's higher-than-expected dividend transfer to the government provides fiscal leeway for populist spending, especially to support lower-income groups. The government is expected to target a fiscal deficit of 5.1% of GDP in FY25, aiming to reduce it further to below 4.5% of GDP by FY26. While tougher reforms may be challenging, supply-side reforms like manufacturing, labour laws, and skill development are likely to continue.
Stocks to buy after Lok Sabha Elections Results 2024: 5 stocks with up to 23.2% upside potential
While the 4 June crash eroded investor wealth, it may have eased stretched valuations. Experts believe the BJP-NDA government’s economic agenda will largely remain unchanged, though some priorities will be adjusted. Even before the election-induced jolts, the markets had been witnessing volatility. To counter the near-term shocks, invest in companies that have shown stability in the past.
Nilesh Shah on factors that are driving the surge in FMCG stocks
When you want to play a game of bowling, you need guardrails and it does stop your ball going into other lanes. Regulatory supervision is the guardrail. If you want to play the game, guardrails are necessary. In my opinion, RBI is formulating rules, regulations, keeping in mind what is probably happening at the lowest common denominator.
NDA government 3.0 hopes fuel Street rebound
India's equity indices surged over 3% on Wednesday following a 6% plunge due to election results. Stocks rebounded on expectations of NDA forming the government. Market volatility is expected until government formation, with limited upsides currently.
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Electoral shock dashes hopes of rate cut
Food inflation challenges RBI, impacting rate cuts. Elections, populist spending, and fiscal landscape influence rate cut decisions.
New govt may cut FY25 fiscal deficit target amid robust growth and windfall RBI dividend
In the interim budget in February, the government had set the FY25 fiscal deficit goal at 5.1% of GDP and revised the FY24 target to 5.8%. However, the actual fiscal gap for FY24 was contained at 5.6%. With exit polls projecting Prime Minister Narendra Modi to retain power with a strong majority, policy continuity is expected, and the government may aim to further improve the fiscal deficit target for the upcoming fiscal year starting April 1, 2025.
Sharp drop in provisions helped RBI transfer bumper dividend to RBI
The Reserve Bank of India's income rose 15% last fiscal due to higher interest income from bond holdings and a sharp drop in provisions transferred to the Contingency Fund, enabling a record dividend payment to the central government.
RBI's dividend transfer may ease deposit rates if govt spends it: Ind-Ra
India Ratings and Research (Ind-Ra) stated that the RBI's Rs 2.11 lakh crore dividend transfer will likely ease liquidity pressure and lower deposit rates in the banking system if the government spends it. The substantial dividend will strengthen the central government's fiscal position, potentially leading to additional spending or fiscal consolidation.
RBI's balance sheet size is now 2.5x the size of Pakistan's GDP
The Reserve Bank of India's balance sheet grew by 11.08% to Rs 70.48 lakh crore as of March 31, 2024. The RBI's income rose by 17.04%, while expenditure decreased by 56.30%. Consequently, the RBI's surplus increased by 141.23% to Rs 2.11 lakh crore, transferred to the Centre.
Sovereign yield falls to near 1-year low post RBI's dividend payout
The yield on the 10-year benchmark government security closed at 6.978%, its lowest level since June 6, 2023, LSEG data showed. The 10-year bond yield had closed at 6.98% on Friday. Bond prices and yields move inversely.
RBI's ₹2 lakh-crore boost may help India's new govt have an easy-peasy run to achieve a goal
The RBI on May 22 announced a record-high dividend transfer to the government equivalent to 0.6 per cent of GDP ( Rs 2.1 lakh) from its operations in FY24. The figure has surpassed the 0.3 per cent of GDP expected in the FY25 budget from February. Hence, the rating agency said that it will aid the authorities in meeting near-term deficit reduction goals.
RBI dividend to have limited impact on medium-term fiscal consolidation: Fitch
Fitch Ratings emphasized the limited medium-term impact of the RBI's surplus transfer on India's fiscal consolidation and debt path. The government targets a fiscal deficit of 4.5% of the GDP by FY26, with potential positive implications for credit ratings.
Rupee gains by most in 5 months on stocks, RBI dividend
The rupee rose as much as 0.3% to 83.03 against the dollar on Friday, the most since December 15, as markets reopened after being shut on Thursday.
RBI's record dividend presents a delicious dilemma for new Indian government
As India prepares for a new government by June 4, a significant Rs 2.11 lakh crore windfall awaits allocation. Options range from faster deficit reduction to increased spending. Analysts anticipate positive investor sentiment, though preferences vary between deficit reduction and expenditure. The BJP-led government's cautious approach contrasts with opposition promises
Bond market happy with RBI cheque to govt; will wait for July Budget before any move: R Sivakumar
R Sivakumar shares insights on the government budget, interest rate regime, and investment strategies in light of RBI's dividend and market optimism. Sivakumar says the bond markets have not run away and that implies markets are going to wait for the final Budget before it makes sense to draw a longer-term trend from this data.
Raging bulls of India: D-Street dances to RBI record
The key index closed at a record 22,967.65, up 369.85 points or 1.64%, after hitting a peak of 22,993.60 during trade. The BSE Sensex rose 1,196.98 points, or 1.61%, to end at 75,418.04.
RBI dividend will have economic dividends
RBI came into this windfall because of high interest rates in advanced economies, which may persist before an eventual cyclical inversion. The strength of India's recovery from the pandemic also contributed to the RBI surplus, and monetary policy would be inclined to pursue this course by easing interest rates ahead of the pack. Inflation is offering comfort on the demand side for an interest rate downcycle. Food inflation, less amenable to demand management, remains a concern.
RBI's record dividend invites mixed reactions from economists
The Reserve Bank of India's (RBI) decision to declare its highest-ever dividend of Rs 2.11 lakh crore has sparked mixed reactions from economists. Noted economist Suman Mukherjee views it as a sign of economic strength, attributing the windfall to various factors such as a surge in foreign exchange reserves and proactive government management. Mukherjee believes that maintaining low interest rates will counter potential recessionary effects.
India to get rating support if it uses RBI dividend to reduce fiscal deficit: S&P analyst
S&P Global Rating suggests India could improve its rating if it channels the record Rs 2.1 lakh crore dividend from the RBI to reduce fiscal deficit. The dividend, around 0.35% of GDP, could aid fiscal consolidation, potentially supporting a faster path to reducing the deficit and boosting India's creditworthiness.
How will RBI's Rs 2.11 lakh cr dividend payout to government help Indian economy? A Balasubramanian answers
So, I think combination of these two things put together have made RBI to come with about highest ever dividend, especially at a time where the market is also generally getting, not market, in general, the bond market keeps a very close eye on fiscal numbers.
Swaminathan Aiyar wonders how RBI managed to give Rs 2.1 lakh cr dividend to govt, says it will make a huge difference to July Budget
Finance Minister aims to reduce fiscal deficit from 5.8% to 4.5% in two years, relying on non-revenue RBI transfer. This strategy facilitates reaching 5.1% deficit this year. Challenges remain in sustaining revenue deficit reductions alongside fiscal targets. Aiyar says it is not very clear at this point what has resulted in this rise in the RBI dividend. Once we have greater clarity on that, we will be able to find out what are the consequences for different parts of the economy.
Government gets Rs 2.11 lakh crore from RBI by way of dividend
The Reserve Bank of India (RBI) has transferred a record surplus of Rs 2.1 lakh crore to the central government for FY’2023-24, exceeding expectations. This windfall, largely from interest income on overseas securities and income from LAF operations, strengthens the government's fiscal position and may lead to a reduction in borrowing. The surplus, determined by the Economic Capital Framework (ECF), represents 25.5% of RBI's total assets.
RBI's Rs 2.1 lakh crore payout: When it all adds up to deliver a windfall to govt
At a time when some of the central banks in the advanced world have reported losses and negative equity, RBI will hand over a dividend cheque of more than ₹2.1 lakh crore to its sole owner, the government.
Rs 2.1 lakh crore: RBI’s record dividend swells govt coffers
The benchmark bond yield retreated below 7% on expectations that New Delhi would now need to borrow less this fiscal year. “The higher dividend is welcome, of course,” finance secretary TV Somanathan told ET. “It exceeds our estimate by 0.2-0.3% of GDP.” In the interim budget, North Block had factored in receipts of Rs 1.05 lakh crore under dividends and profits.
RBI approves dividend of Rs 2.11 lakh crore to Centre for FY24, up 140% YoY
RBI DIVIDEND: At its 608th meeting in Mumbai, the Reserve Bank of India approved a dividend of Rs 2.11 lakh crore for the Central government for FY24, marking a 141% increase from FY23's Rs 87,416 crore. This move, reported earlier by ET, aids the Centre in reaching its fiscal deficit target for FY25.
Centre may get around ₹1 lakh crore in RBI dividend
Last week, the RBI announced a steep cut in the government's borrowing through Treasury Bills, reducing the amount of funds that the Centre would have garnered through these short-term instruments by ₹60,000 crore.
RBI likely to transfer Rs 1 lakh crore to govt in FY25
The Reserve Bank of India (RBI) is expected to transfer around Rs 1 lakh crore to the government in FY25, as per a report by Union Bank of India. This projection reflects a slight increase from the Rs 874 billion transferred in the previous fiscal year. The report anticipates a robust dividend payout for FY25, with analysts predicting a potential positive surprise similar to the previous fiscal year. Despite various factors influencing RBI's dividend calculation, such as interest earnings and foreign exchange gains, analysts foresee strong dividend figures.
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