You are here: Home » Reuters » News
Business Standard

RBI dividend to government halves to $4.78 billion

Reuters  |  MUMBAI 

(Reuters) - The Reserve of (RBI) will pay 306.59 billion rupees ($4.78 billion) as a to the for the year ended June 2017, less than half the previous year's levels as a ban on higher currency bills raised the central bank's expenses.

The decline could make it harder for the to meet its fiscal deficit target of 3.2 percent of gross domestic product for the year ending in March, although New Delhi will likely meet the shortfall by boosting revenues from other areas.

The amount paid is less than half of the 658.76 billion rupees the transferred to the last year and also less than the 749.01 billion rupees the had expected from the central this year.

Analysts said the lower was largely because of costs associated with India's shock action in November to remove higher-currency bills from circulation in a bid to target undeclared wealth. The did not provide a breakdown of its

Anjali Verma, an economist at PhillipCapital said the costs likely included "printing of new notes, and of course, the entire compliance and the entire procedure" of monitoring the process of depositing the banned notes into the banking system.

The government's fiscal prudence has won strong backing from markets, helping spark a record-setting rally in stock markets and contributing to a rally in bond markets.

The shortfall in from the will likely spur the to increase revenue from other areas, analysts added, including potentially cutting spending or seeking to raise more from planned market divestments in state-run companies.

($1 = 64 rupees)

(Reporting by Abhirup Roy and Rafael Nam; Editing by Nick Macfie and Pritha Sarkar)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, August 10 2017. 19:40 IST