Chief Economic Advisor Arvind Subramanyam has downplayed the lower RBI dividend for the year ended June 2017 which was over 50% less than last year’s amount saying it was in line with what was budgeted.
The Reserve Bank of India (RBI) had earlier said it would transfer Rs 30,659 crore as surplus to the government for the year ended June 2017.
“The RBI dividend has come down, but it is in line with what was budgeted. So, in that sense it doesn’t represent something new. Is this a fiscal shock? I assess shock as relative to what we budgeted. I think relative to that, there has not been, as far as I know, a shock”, he said in a media interaction.
For the year 2015-16, the RBI board had approved the transfer of surplus amounting to Rs 65,876 crore to the government. The apex bank did not give reasons of the sharp fall in the surplus income for the year ended June 2017. But it is seen in the context of demonetisation, operational expenses in cost of printing new currency and the associated logistics of collecting old notes. The exercise was so strenuous that the counting of old notes is still going on and the bank in fact has tendered for counting machines.
The government had, in December last year, issued an ordinance for scrapped high value currency notes of Rs 500.
The Reserve Bank, from FY’14 onwards, transfers its entire profit to the government as is the global norm. A bulk of the income for the central bank is interest income, of which nearly 60 per cent is interest earned on domestic bond holdings. While the cost of printing currency notes in the past has been just about 20 per cent of its total expenses, which is estimated to have more than doubled in FY 17 because of demonetisation of Rs 500 and Rs 1000 notes.