The Centre is pushing for the Reserve Bank of India (RBI) to enhance its dividend payout to the exchequer for the year 2016-17.
The RBI transferred just ₹30,659 crore as dividend for the year gone by to the exchequer — less than half the ₹65, 876 crore it had paid in 2015-16.
The government had budgeted for a ₹58,000 crore dividend from the RBI in its Budget for this fiscal year.
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“The RBI has calculated a surplus of ₹44,000 crore and has transferred ₹30,000 crore to the government,” said Subhash Garg, Secretary, Economic Affairs.
“We are discussing with the RBI whether there is scope for more transfer as we have our budget estimate at ₹58,000 crore,” he said.
The development assumes significance as the Centre had been downplaying the central bank’s disclosure that about 99% of the demonetised ₹500 and ₹1,000 currency notes had returned to the central bank with just about ₹16,000 crore remaining outside.
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This had dispelled the hope of a large surplus transfer from the RBI to the government on account of notes that weren’t returned to the formal system for fear of attracting the taxman’s attention.
RBI’s liability
The government had issued an ordinance in December to extinguish the Reserve Bank of India’s liability towards honouring such notes.
The demonetisation exercise had hit RBI’s finances in a big way as the cost of printing new notes more than doubled to ₹7,965 crore in 2016-17 compared with ₹3,421 crore in the previous year. RBI’s income for the period declined to ₹61,818 crore from ₹80,870 crore, while its total expenditure more than doubled to ₹31,155 crore, from ₹14,990 crore.
The central bank’s income was also impacted due to rupee appreciation and liquidity mop up.
Expenditure also increased due to higher printing and freight charges for notes and higher provisions for the contingency fund.
Jaitley’s position
Finance Minister Arun Jaitley said on Wednesday that confiscating money was never the objective of demonetisation, with the Ministry stressing that it had expected all scrapped bank notes to come back to the banking system ‘to become effectively usable currency.’
‘AG’s argument’
When asked about former Attorney General Mukul Rohatgi’s submission in the Supreme Court last year that ₹4-₹5 lakh crore wouldn’t come back to the system after demonetisation of high-value currency notes worth ₹15.44 lakh crore, Mr. Garg said it had been ‘an opinion’.
“I think there was a clear expectation that much of it would come back. Whether all of it would come, people had different estimates and guesses.
“But the Centre never said that it expects any currency not to come back,” the secretary said.
“I don’t think government ever made any statement in Parliament or other otherwise or as part of an affidavit,” the Secretary, Economic Affairs said.