India’s top bank unveils $24 bn windfall for govt

India’s central bank has announced a $24-billion windfall for the government, giving a much-needed boost to Prime Minister Narendra Modi as he seeks to kickstart growth in Asia’s third-biggest economy. The RBI said it had approved a transfer of 1.76 trillion rupees ($24.4 billion) to government coffers, including a dividend of 1.23 trillion rupees and 526 billion rupees in excess reserves following the adoption of a new methodology for assessing market risk.

Monday’s announcement came days after Finance Minister Nirmala Sitharaman announced a slew of measures to help the economy, including bringing forward a $10-billion liquidity lifeline for credit-shy banks and rolling back an extra levy on equity sales that had spooked foreign investors. Sujan Hajra, an economist at Anand Rathi Securities, said that the latest announcement is a “positive move” for the economy and for public finances.

“As the RBI said, despite this fund transfer, India will still have one of the best capitalisations of the central banks globally and it does not reflect poorly on either the government or the central bank,” Hajra said. Ashutosh Datar, an independent economist from Mumbai, agreed, telling: “The amount looks huge but it is not and there is no raid on RBI reserves.”