INSUBCONTINENT EXCLUSIVE:
Ms Sitharaman said the ministry hasn't yet decided on the end-use of the money from the RBI.The Reserve Bank of India's record Rs 1.76
boosting spending to spur economic growth.The RBI's board approved the transfer on Monday, which includes a dividend of Rs 1.23 lakh crore
that some Group of 20 nations pumped into their economies during the global financial crisis -- comes amid a slowdown in country's growth
to a five-year low, depressed consumer spending and reports of tens of thousands of job losses in the auto industry.Finance Minister Nirmala
Sitharaman last week announced various measures to spur growth, including hastening the capital infusion into state-run lenders
Finance Ministry is keen to use the transfer to cut its budgeted borrowings rather than fund a stimulus package, though it's yet to make a
final decision on how to spend the amount, people with knowledge of the matter said.Ms Sitharaman said the ministry hasn't yet decided on
the end-use of the money from the RBI
A decision will be communicated when it's made, she said in Pune on Tuesday.The government could cut its planned borrowings if it uses the
funds to plug a revenue shortfall in its budget, helping Ms Sitharaman keep the deficit under control
three months to March.Sonal Varma and Aurodeep Nandi, economists at Nomura Holdings Inc., estimate India has a tax revenue shortfall of Rs 1
engage in stimulus measures," they said in a report.Bonds rallied initially on the news of the RBI payout, but erased gains at close as a
closer analysis proved that the payout isn't that big
dividends to the government every year, based on the profits from its investments and printing of notes and coins
A snapshot of its balance sheet is due later this week, when the central bank will release its annual report.Over the past couple of years,
the Finance Ministry has been seeking higher payouts from the RBI, arguing the central bank is holding more capital than it needs
It was a source of contention between the government and the former Governor Urjit Patel, who quit in December.A panel, led by former
Governor Bimal Jalan, was set up to study the central bank's capital framework
Its recommendation, accepted by the RBI's board on Monday, was that the central bank should hold realized equity of between 5.5 per
The board decided to maintain the realized equity level at 5.5 per cent, the central bank said.The combined payout far exceeds the
India's transfer of Rs 1.76 lakh crore to the government should offset any revenue shortfall from lower tax buoyancy amid slower growth
this year, allowing more room to boost spending
It will also make it easier for the government to meet its budget deficit target of 3.3 per cent of GDP for fiscal 2020.-- Abhishek Gupta,
India economistSamiran Chakraborty and Baqar M Zaidi, analysts at Citigroup Inc
said the government had two options: it can immediately spend part of the amount to stimulate the economy or it can wait for some clarity to
emerge on the potential revenue shortfall before spending the money.Since the government has shown "stellar resolve" in maintaining" fiscal
targets, "our bias is to think that the government will follow the latter approach," they wrote in a note.Ms Sitharaman said last week the
India's economy, the third-largest in Asia
Data on Friday will likely show growth weakened further to 5.7% in the quarter ended June.The windfall will probably be pumped into banks,
which should help reduce lending rates, Bank of America Merrill Lynch economists Indranil Sen Gupta and Aastha Gudwani said in a note
That would be a "game changer" for the economy, they said.Get Breaking news, live coverage, and Latest News from India and around the world
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