Budget 2024: In the upcoming budget for 2024-25, the government plans to increase dividend income significantly, targeting around Rs 70,000 crore from the Reserve Bank of India (RBI) and financial institutions (FI). According to PTI, this comes after a successful financial year with higher than expected dividends from the RBI.
Finance Minister Nirmala Sitharaman will present the interim Budget in the Lok Sabha on February 1. Sources suggest that the government aims to exceed the estimated dividend of Rs 48,000 crore from financial institutions in the current fiscal year.
The RBI’s dividend payout for the current financial year exceeded expectations, reaching Rs 87,416 crore. With the favorable performance of public sector banks and financial institutions in recent quarterly reports, there is an expectation that their dividend payments in the next fiscal year will surpass the current year’s figures.
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According to sources, a reasonable expectation is that the government will receive approximately Rs 70,000 crore as dividends from the RBI and financial institutions in the fiscal year 2024-25. In the Union Budget for 2023-24, the government set a 17% higher dividend target of Rs 48,000 crore from the RBI, public sector banks and financial institutions, and this target was comfortably exceeded.
But this target was far surpassed when the Reserve Bank handed over a surplus of Rs 87,416 crore to the central government for the fiscal year 2022-23.
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The surplus transfer of Rs 87,416.22 crore by the Reserve Bank during 2023-24 significantly exceeded both the previous year’s amount (Rs 30,307.45 crore) and the budgeted amount of Rs 48,000 crore for Dividend/Surplus transfer. In the previous fiscal year, the government collected Rs 40,953 crore from the RBI and public sector financial institutions.
The significant increase in dividends from banks and financial institutions, along with increased tax collections, is expected to help the government pursue a fiscal deficit reduction plan. The government’s target is to reduce the fiscal deficit to less than 4.5% by 2025-26, down from the estimated 5.9% of GDP in 2023-24, as outlined in the fiscal consolidation roadmap. In the next financial year, starting April 1, 2024, the government must reduce the fiscal deficit to 5.4%, following the roadmap.