India’s central bank may also make a substantially higher dividend payment to the government in FY27, with estimates suggesting that the central bank may pay a maximum of Rs 3 lakh crore, said analysts and economists.
The Reserve Bank of India (RBI) has already made record surplus payments to the government in the past few years, thanks to high global interest rates, foreign exchange business, and risk provisioning, and market participants believe that these factors may continue to support the central bank in making a higher dividend payment to the government.
During FY25, the RBI made a record transfer of Rs 2.1 lakh crore to the Centre, which was significantly higher than budget estimates. The RBI’s robust transfer helped the Centre manage its fiscal deficit, as it gave the government more room to spend without borrowing.
Going forward, experts forecast that the RBI’s earnings from its foreign currency assets, such as US treasury securities, will continue to be robust, provided that global interest rates remain higher for a longer period. Moreover, the RBI’s domestic liquidity management and earnings from government securities will continue to contribute to the central bank’s surplus.
Another important consideration is the RBI’s Economic Capital Framework (ECF), which sets the level of surplus that can be transferred to the government. Since the RBI’s contingency risk buffer is currently at the higher end of the target range, there is still scope for a higher dividend, according to experts.
A higher dividend in FY27 could help the government deal with its fiscal challenges driven by its expenditure on welfare and infrastructure, as well as possible revenue gaps. However, the final transfer amount will depend on the global financial environment, exchange rates, and the RBI’s assessment of financial stability risks, according to analysts.
The RBI usually makes an announcement regarding the final surplus transfer following its central board meeting at the end of the financial year.
