Economists’ opinions on the Reserve Bank of India’s (RBI) decision to announce its highest-ever dividend of Rs 2.11 lakh crore for 2023–2024 were divided.
For the fiscal year 2022–2023, the RBI transferred a dividend of Rs 87,416 crore to the Center. In 2018–19, the previous peak was Rs 1.76 lakh crore.
Abhirup Sarkar raised worries that the payout could limit the RBI’s ability to rescue lenders in future years because the central bank might not have the money to act quickly, notwithstanding famous economist Suman Mukherjee hailing it as a sign of economic strength.
Mukherjee told news agency PTI, “This is not a fluke,” attributing the windfall to a combination of reasons such as loans to commercial banks and an increase in foreign exchange reserves.
He emphasized that the stock market reached a record high, demonstrating the positive impact of RBI development.
Mukherjee talked down worries about interest rates going up, arguing that keeping rates low will mitigate any potential effects on a recession.
But prominent economist Abhirup Sarkar, a former Indian Statistical Institute professor, has some concerns.
Sarkar raises concerns about the government’s intentions and speculates that reducing the deficit may be the main motivator.
He added that the central bank might have paid the big dividend out of reserves rather than from its income.
