As the Indian government struggles to attain its fiscal deficit target of 3.3% of the gross domestic product (GDP) for 2018-19, it is reportedly seeking to use the interim dividend from the central bank to bridge the gap.
The Narendra Modi-led government wants at least 231 billion rupees (US$ 3.30 billion) from the Reserve Bank of India before March 31. However RBI Governor Shaktikanta Das says no decision has been taken yet on the amount to be handed over, Business Standard reports.
The sum demanded by the government includes 131 billion rupees (US$ 1.87 billion) that Economic Affairs Secretary Subhash Garg has been publicly seeking from the central bank’s contingency reserve fund since 2017-18. This amount was classified by the RBI as contingency reserves following demonetization. The rest of the amount demanded by the government is sought from capital reserves.
Last year on March 27, just three days before the end of the fiscal year, the RBI transferred an interim dividend of 100 billion rupees. Now the government seeks a similar amount plus the pending demand from contingency reserves.
The government’s fiscal deficit target for the current fiscal year is set at 6.24 trillion rupees, or 3.3% of GDP. For the period from April-November, the deficit has already reached 7.17 trillion rupees, or almost 15% over the budget estimate.