oppn parties Centre Gets RBI Bonanza Before Full Budget

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  • The Indian envoy in Bangladesh was summoned by the country's government over the breach in the Bangladesh mission in Agartala
  • Bank account to soon have 4 nominees each
  • TMC and SP stayed away from the INDIA bloc protest over the Adani issue in the Lok Sabha
  • Delhi HC stops the police from arresting Nadeem Khan over a viral video which the police claimed promoted 'enmity'. Court says 'India's harmony not so fragile'
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  • Re goes down to 84.76 against the USD but ends flat after RBI intervenes
  • Sin goods like tobacco, cigarettes and soft drinks likely to face 35% GST in the post-compensation cess era
  • Bank credit growth slows to 11% (20.6% last year) with retail oans also showing a slowdown
  • Stock markets continue their winning streak on Tuesday: Sensex jumps 597 points to 80845 and Nifty gains 181 points to 24457
  • Asian junior hockey: Defending champions India enter the finals by beating Malaysia 3-1, to play Pakistan for the title
  • Chess World title match: Ding Liren salvages a sraw in the 7th game which he almost lost
  • Experts speculate whether Ding Liren wants the world title match against D Gukesh to go into tie-break after he let off Gukesh easily in the 5th game
  • Tata Memorial Hospital and AIIMS have severely criticized former cricketer and Congress leader Navjot Singh Sidhu for claiming that his wife fought back cancer with home remedies like haldi, garlic and neem. The hospitals warned the public for not going for such unproven remedies and not delaying treatment as it could prove fatal
  • 3 persons died and scores of policemen wer injured when a survey of a mosque in Sambhal near Bareilly in UP turned violent
  • Bangladesh to review power pacts with Indian companies, including those of the Adani group
D Gukesh is the new chess world champion at 18, the first teen to wear the crown. Capitalizes on an error by Ding Liren to snatch the crown by winning the final game g
oppn parties
Centre Gets RBI Bonanza Before Full Budget

By Our Editorial Team
First publised on 2024-05-24 16:23:13

About the Author

Sunil Garodia The India Commentary view

The Centre received an unexpected bonanza - the RBI approved the transfer of Rs 2.1L cr as surplus to it. This is 140% more than what was transferred in 2023 and much higher than what the government was expecting. This has provided the government a lot of breathing space in managing the budgetary accounts. It can either use the funds to reduce the fiscal deficit to the target of 5.1% aimed for the year or increase spending on infrastructure projects or use a mix of both. In all cases, full budget of the new government in July will have a lot less of financial jugglery and a lot more of solid numbers riding on this booty.

As per the numbers, the RBI dividend translates to between 0.6% and 0.7% of the GDP which is huge. The government had planned to reduce the fiscal deficit from 5.8% last year to 5.1% in this fiscal. The RBI dividend alone can help in achieving this. But that would not make sense as fiscal deficit has to be reduced by fiscal discipline which means curtailing revenue expenditure or generating additional income (through disinvestment, for one, where the government’s plans have not materialized in the last 10 years) and reducing revenue deficit. If the revenue deficit in 2024-25 remains the same or balloons further, the RBI largesse would have a negative effect as it will fail to bring fiscal discipline in the system. Hopefully, with the elections done and dusted (which means that there is no immediate need of playing to the gallery by announcing additional welfare schemes), the new government will show fiscal prudence and reduce both revenue deficit and fiscal deficit.

The NDA government has been following the path of fiscal consolidation since the last few years. It must continue to do so. The RBI bonanza is a one-off. It can be used wisely to achieve a lot of things but it must not lead to fiscal indiscipline. 

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