RBI's Historic Dividend Transfer Reveals Strain on Centre's Finances

In a striking revelation, Congress Member of Parliament Jairam Ramesh has pointed to a growing strain on the Centre's financial condition, following an unprecedented dividend transfer from the Reserve Bank of India (RBI). The central bank authorized a massive Rs 2.87 lakh crore payout to the government for the fiscal year 2025-26, one of its highest ever.

This significant payout comes at the cost of cutting the RBI's Contingency Risk Buffer, a move that Ramesh suggests casts doubt on the rosy picture of the Centre's finances. For three years, the RBI had consistently strengthened this buffer, making the recent decision to lower it a curious strategy, resulting in an additional dividend of Rs 92,000 crore for the government this financial year.

The transfer decision, which eclipses last year's Rs 2.69 lakh crore payout, has prompted Union Finance Minister Nirmala Sitharaman to affirm trust in the RBI's financial integrity and calculation methods. She expressed confidence in the central bank's monumental announcement, underscoring the complex interdependencies between the nation's fiscal policy and central bank operations.

(With inputs from agencies.)