Government and RBI have appointed a panel to look into issue around sharing of RBI's reserves.New Delhi:The Reserve Bank of India (RBI), having changed management last month following a clash with government, is likely to transfer an interim dividend of Rs 30,000-40,000 crore to government by March, according to three sources with direct knowledge of matter.The amount would be three or four times amount paid last year and would help government meet its fiscal deficit target, despite a shortfall in revenue collections, most notably from a goods and services tax introduced in 2017, and from divestments.( Government says it does not need RBI reserves to manage fiscal deficit)Former finance ministry official Shaktikanta Das was appointed as new governor of RBI, following resignation of Urjit Patel last month amid tensions over dividend payout and other issues.Aside from tensions over dividend payout, government has also been critical of RBI's constraints on lending by state banks with high levels of non-performing loans.The rupee hit a session low of 69.80 against dollar on Monday, following Reuters report on interim dividend and impending revenue shortfall.The government and RBI have now selected a panel to look into issue around sharing of RBI's reserves.The RBI typically generates revenue from trading in bonds and currencies, part of which goes toward building reserves, while remainder is transferred to government in form of a dividend.The interim dividend for this financial year ending in March would be decided by RBI board separately and not by six-member committee formed to review future dividend transfer policy, said sources, who asked not to be named as discussions are private."We are absolutely sure that an interim dividend of more than 30,000 crore rupees would be paid before March end," one of sources told Reuters.The RBI did not respond to an email seeking comment, while Finance Ministry declined to comment.Speaking with media in New Delhi on Monday, Das declined to comment on Reuters report, beyond saying that details would be shared once RBI board made its decision.This will be second consecutive year in which RBI has given government an interim dividend, ahead of an annual payout that it normally gives government in August, following closing of RBI's books in June.The sum government is pushing for this year is significantly more than 10,000 crore rupee interim dividend it received last year.
Following close of RBI books last year, it paid remaining dividend of 40,000 crore rupees in August 2018.An interim payout before end of March would take total transfers from RBI to 70,000-80,000 crorerupees for government's current fiscal year ending March 31, higher than previous record payment of 65,900 crore rupees in 2014/15.The RBI could make a final decision on dividend by time Finance Minister Arun Jaitley presents government's budget on February1, two of sources said.DELAYING TAX REFUNDSThe funds are crucial to meet fiscal deficit target of 3.3 per cent of GDP for financial year ending in March, as government's revenue shortfall may be as high as 1 lakh crore rupees, according to two of sources.The government has also made supplementary spending requests to parliament totaling 26,000 crorerupees, putting fiscal deficit target under more pressure."The revenue gap we are assuming includes two major items --GST collections shortfall and some shortfalls anticipated from divestment side," one of officials quoted above said.The government expects to undershoot its 80,000 crore rupees divestment target, possibly by 10,000 crore rupees.
It also faces a revenue gap from GST of between 1 lakh crore rupees to 1.4 lakh crore rupees, official said.The government is also planning to hold back tax refunds of some corporates to be able to adjust revenue gap to meet its fiscal deficit, second official said."We have plans to hold back tax refunds of some big corporates which should give us a cushion of 1 lakh crorerupees," said second official.