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Government expects 690 billion rupees in dividend from RBI in coming financial year

File photo: The Reserve Bank of India. Photograph:( Zee News Network )

Reuters New Delhi, Delhi, India Feb 05, 2019, 04.26 PM (IST)

The Indian government expects the central bank to pay a dividend of 690 billion rupees ($9.63 billion) in the next financial year beginning April 2019, a senior finance ministry source, who requested anonymity, told reporters on Tuesday.

Piyush Goyal, India's interim finance minister, in his annual budget for 2019/20 tabled in parliament last week, estimated to get 829.11 billion rupees through dividend from banks, financial institutions and the Reserve Bank of India next financial year.

Meanwhile, the Reserve Bank of India is likely to change its monetary policy stance to "neutral" from "calibrated tightening" on Thursday and move closer to a rate cut in April as inflation stays below the central bank's 4per cent target.

A softer stance would bode well for Prime Minister Narendra Modi's government, which wants to boost lending and lift growth as it faces elections by May.

While two-thirds of 65 economists expected the RBI to hold the repo rate at 6.50 per cent, most respondents predicted the six-member monetary policy committee (MPC) would shift its stance to neutral, according to a Reuters poll published on Jan. 24. Nearly half of respondents expected a 25 basis point rate cut by mid-2019.

At Thursday's MPC meeting - the first for RBI Governor Shaktikanta Das - it will be tough to balance desire to support economic growth with the need to contain inflationary expectations.

Some economists said Das, a seasoned bureaucrat, is likely to promote growth and aid the fragile financial sector, as inflation is comfortable at present, in December dropping to an 18-month low of 2.19 per cent.

Story highlights

Piyush Goyal, India's interim finance minister, in his annual budget for 2019/20 tabled in parliament last week, estimated that the government would get 829.11 billion rupees through dividend from banks, financial institutions and the Reserve Bank of India in the 2019-20 financial year.