Govt might wish for a higher surplus from RBI

by Yash Shah

With tax revenue shrinking owing to the pandemic, the Centre is expecting the Reserve Bank of India (RBI) to transfer a higher-than-budgeted surplus for the second year in a row in 2020-21. As per a report in Business Standard, the RBI is buying more and more government bonds through Open Market Operations (OMOs) and the Centre is paying interest on that. The interest the RBI earns may be transferred to the government as dividend by the end of the year. The Bimal Jalan committee had recommended that the RBI, at all times, should keep its realized equity at 5.5 to 6.5 per cent of the balance sheet, and the rest could be transferred to the central government.