The Centre's focus on tax revenue is again on the RBI's coffers

Mumbai, Ta. 30 June 2020, Tuesday

Given the sharp decline in tax revenues due to Corona in the current financial year, the central government is expecting higher dividends from the Reserve Bank to save its fiscal math.

Following the recommendation of the Bimal Jalan Committee, there was an issue of transferring excess capital from the Reserve Bank to the Center in the last financial year, while the Center is considering transferring the Reserve Bank's interest income as dividend to the government this year.

The RBI has bought a large number of government-issued bonds, which are expected to boost its interest income.

Between April 1 and June 31, the Reserve Bank bought government bonds worth Rs 1.50 trillion. These have been purchased from the open market.

To provide financial support to the government, the Reserve Bank is increasingly buying government bonds through open market operations. The government pays interest on these bonds. The Reserve Bank will return the money earned as interest to the Center as dividend, Finance Ministry sources said.

In the current financial year's budget, the central government is expected to receive a dividend of Rs 3 crore from the Reserve Bank and banks.

The lockdown imposed due to Corona has affected the central government's tax revenue as businesses in the country have been shut down. Revenue through disinvestment is also likely to be hit in the current financial year. Affected by revenue through taxes, the central government is looking at various sources of revenue generation.

In the last financial year, the Center received a total of Rs 1.5 trillion from the Reserve Bank.