In a move that could help the government bridge its fiscal deficit, the Central Board of the RBI has decided to transfer a staggering Rs 1.76 trillion of its surplus to the Centre for 2018-19.
This amount is much more than the government's target of about Rs one trillion via disinvestment in FY20.
Interestingly, this is the biggest-ever payout by the central bank. It includes Rs 1.23 trillion of surplus for 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework adopted at the RBI Board meeting. The higher surplus is due to long-term forex swaps and open market operations conducted by the central bank over the last fiscal. The surplus transfer was finalised in line with the recommendations of the committee under former RBI governor Bimal Jalan. RBI’s central board accepted all the recommendations of the panel. This alone will fill up more than half of the country’s estimated fiscal deficit.