RBI Dividend Fuels Fiscal Flexibility Amid Global Trade Uncertainties
The Reserve Bank of India’s record Rs 2.69 lakh crore dividend transfer for FY25, announced on May 23, 2025, provides a significant fiscal boost, surpassing the government’s budgeted Rs 2.56 lakh crore.
Fueled by forex gains from $69.66 billion in dollar sales, interest income from rupee securities, and higher U.S. treasury yields, this RBI dividend supports India’s 4.4% fiscal deficit target for FY26.
However, the RBI’s cautious increase of the Contingent Risk Buffer to 7.5% reflects vigilance against global risks like U.S. tariffs and rupee volatility.
This move reduced the dividend by Rs 80,000 crore, prioritizing financial stability.
The surplus could fund infrastructure or reduce borrowing, while liquidity injections may ease rates, mimicking a 25-basis-point cut.
Analysts urge balancing growth spending with fiscal consolidation amid global uncertainties.
Read More at Moneycontrol
