INSUBCONTINENT EXCLUSIVE:
The central bank will consider an early transfer of a part of its profit to the government, which is desperate for cash to fund populist
pledges ahead of a national election.The Reserve Bank of India's central board will decide on the interim dividend, Governor Shaktikanta
Das said after a meeting where Finance Minister Arun Jaitley briefed members about the budget and the economic outlook in New Delhi Monday
The board may announce its decision later today
The government has budgeted for Rs 28,000 crore ($4 billion) in interim payment from the RBI.Any payout from the central bank will help
partly bridge the government's budget gap in the year ending March after it missed tax collection and asset sale targets
It could also be key to funding the government's income support program for farmers ahead of a general election due by May.The government
needs cash after allocating Rs 20,000 crore toward the first installment of the $10.5 billion program by March 31
The cash support -- handing about 120 million farmers with up to 2 hectares (4.9 acres) three payments of 2,000 rupees per year -- was the
government's last attempt at reversing fortunes after the BJP lost control of three key states in regional elections in December.The
budget has allocated resources for the farm income support program, Mr Jaitley told reporters at the same briefing, referring to the budget
proposals announced on Feb
1.The government has, in all, budgeted Rs 74,140 crore in dividends from the RBI and the state-run lenders in the year ending March 31 and
has penciled in Rs 82,910 crore for the next year.Public StandoffThe demand on the RBI for more dividends and to part with a greater share
of its capital has been a contentious issue between the central bank and the government
It resulted in a public standoff last year and is seen as one of the reasons for the abrupt exit of then Governor Urjit Patel.The finance
ministry has asked the central bank to transfer about Rs 27,000 crore of surplus capital withheld by it in the previous two financial years
Separately, finance ministry officials estimate the RBI has at least Rs 3.6 lakh crore more capital than it needs, which they say can be
used to help bolster weak banks.However, a recent study by the Centre for Advanced Financial Research and Learning, a Mumbai-based think
tank, showed the central bank has insufficient capital, and much less a surplus to hand over to the government.
