RBI’s dividend gives Govt fiscal breathing space amid crude oil pressures: Kotak Sec

ANI New Delhi

The Reserve Bank of India's (RBI) record dividend payout of ₹2.87 lakh crore is expected to directly repair the government's balance sheet at a time when rising global energy prices and prolonged geopolitical tensions are putting pressure on India's fiscal position, according to Anindya Banerjee, Head of Commodities and Currency Research at Kotak Securities.

Banerjee said the fiscal strain caused by elevated crude oil prices and fuel tax reductions would be partly cushioned by the central bank's surplus transfer to the government. 

Terming the payout a "substantial amount," Banerjee said, "A chunk of that impact has been absorbed by the government by way of cutting the excise duties on fuel... So, RBI's dividend will help to compensate some of that shortfall." 

Banerjee noted that the dividend comes at a crucial time as India faces increasing import costs amid continued disruptions in global energy supply chains triggered by the West Asia crisis.