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The government may get only a small windfall as a transferable surplus from the Reserve Bank of India (RBI) this fiscal as the high-powered committee is likely to suggest a phased approach.
Sources close to the development said the Bimal Jalan Committee, which is looking into the economic capital framework of the RBI, may suggest transferring only a part of the estimated ₹9.6 lakh crore reserves with the central bank.
“The transferable surplus may not amount to much. The RBI already pays an annual dividend to the Government and as such there are also questions on whether it needs to transfer the excess funds or surplus it has to the government all at once,” said the source, adding that as a compromise, it may suggest transfer of a partial amount this fiscal.
Sources said there have also been questions as to the productive use of funds by the government.
Till now, a consensus has eluded the committee, which is now expected to meet later this month after the Budget on July 5 to finalise its recommendations on the issue.
The committee, which includes Finance Secretary Subhash Chandra Garg, was set up on December 26 last year with a 90-day deadline from the date of its first meeting.
Fiscal deficit
Even without the comfort of a large surplus from the RBI, the Budget 2019-20 is expected to retain the fiscal deficit target of 3.4 per cent of the GDP that was spelt out in the Interim Budget.
Sources said the government remains confident of meeting its tax collection targets as well as realisation of proceeds from disinvestment.
There is also a view that changing fiscal goalposts mid-way may not be the best course of action, especially considering that the government in its previous term worked hard on initiatives for fiscal consolidation.
The Centre’s fiscal deficit touched 52 per cent of the full-year target within the first two months of 2019-20.
“We are of the opinion that the government will prune its tax revenue projections vis-à-vis Interim Budget; bank on a possible spectrum auction windfall and a higher disinvestment target of ₹1 lakh crore on the non-tax front. But to retain its Interim Budget fiscal deficit target of 3.4 per cent of GDP, expenditure curtailment will be necessary,” said Shubhada Rao, Chief Economist, Yes Bank, in a report.
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