SBI research has projected equally higher surplus transfer for the current fiscal by the Reserve Bank of India (RBI) which will help the Centre’s efforts to achieve 4.5 per cent fiscal deficit by fiscal year 2025-26.
On May 22, the central board of the RBI approved the transfer of over ₹2.10-lakh crore crore as surplus to the Centre for the accounting year 2023-24. “We expect that higher dividend payments could continue in FY25 also. This is because US yields continuing at above 4 per cent will imply asset income boost for RBI as well as bolstering foreign exchange reserves through dollar buying,” said an SBI research report, authored by a team led by Soumya Kanti Ghosh, Group Chief Economic Adviser.
Further, it said that there is a large probability of RBI dividend being healthy in FY25 as well and may even be closer to ₹2.1-lakh crore . “It may be noted that a rate cut by Fed towards September could fuel a rally in currency against the dollar,” the report said.
The interim budget for FY25 has projected ₹1.02-lakh crore to be collected as ‘Dividend/Surplus of Reserve Bank of India, Nationalised Banks & Financial Institutions.’ Now, it has already got ₹2.10 lakh crore and now a good amount of dividend is also expected from public sector banks and financial institutions. These all expected to contain the fiscal deficit for even lower than the budget estimate.
Fiscal consolidation
As announced in the Budget Speech for FY 2021-22, the government would continue on the broad glide path of fiscal consolidation to reach a fiscal deficit to GDP level below 4.5 percent by FY26. In line with this commitment, RE 2023-24 projects fiscal deficit to GDP of 5.8 per cent, which is lower than the budget estimate of 5.9 per cent. Increase in non-tax revenue is critical for achieving the deficit as planned by the government.
Meanwhile, tax revenue is also expected to show good buoyancy. For example, first month collection of GST exceeded ₹2.10 lakh crore. Although during next months, collection may not be that high, but it is likely to be higher than the average monthly collection ₹1.68-lakh crore (2023-24). Average collection during FY22 was ₹1.50-lakh crore.
The total indirect tax collections (GST+ Central Excise + Custom Duty) are estimated to be over ₹16.18-lakh crore, nearly 12 per cent more than FY24. Among the direct taxes, the collection from taxes on companies is expected to increase by 13 per cent to reach over ₹10.4-lakh crore. The collections from personal income tax are also expected to increase to ₹11.56-lakh crore in 2024-25, 13 per cent higher than FY24.