Mumbai: Governor Shaktikanta Das on Thursday said it is legitimate for the government to demand an interim dividend from the RBI as it’s part of the statutes and use it the way it wants. Das was replying to a question on the impact of the impact of the Rs 6000-per annum cash payout to around 120 million farmer households on the fiscal numbers and how serious is the farmers’ distress according to the central bank’s assessment.
Das also parried other questions about the credibility of the budgetary numbers as well as the impact of the other many give-aways in the budget on fiscal slippages. Payment of surplus or interim dividend to the government is a part of the RBI Act, so we are not doing anything beyond what is there in the legal provision,” was all that Das would proffer.
Be it the impact of the Rs 6,000 cash transfer to 120 million poor farmer households that too retrospectively from December 2018–leading to an over Rs 20,000 crore outgo this fiscal this year; or the massive tax-breaks to the middle-class, shaving off another Rs 22,000 crore-plus of tax revenue, or the questions about the “hygiene” of the fiscal deficit as the interim budget document which should have been just a vote-on-account contains lots of off-budget measures.
The poll-bound BJP government’s move to offer cash to 120 million farmer families was criticized by many as a way to buy peace with the farmers who are severe financial distress the money for which would be met by an interim dividend of Rs 28,000 crore from the RBI.
It can also be noted that some concerns have been raised about the practice of government asking RBI for an interim payout before the close of a fiscal year to bridge its fiscal gap for the second consecutive year. A wider fiscal deficit is generally seen as a concern for RBI because of its inflationary impact.