Reserve Bank dividend will determine new government's fiscal priorities: Ratings agencies

Reserve Bank Dividend: The Reserve Bank of India (RBI) paid the largest dividend to the government of Rs. 2.11 lakh crore has been described as a positive financial position by rating agencies worldwide. These companies said that the use of this dividend will determine the fiscal priorities of the new government. Earlier this week, the RBI board decided to pay the government a dividend of Rs 2.1 lakh crore from its profit for the fiscal year 2032-24, more than double the government's budget of Rs 1.02 lakh crore. India's rating remains positive on medium-term fundamentals, said Fitch Ratings' Asia-Pacific sovereign director Jeremy Zook, especially if supported by reforms to improve fixed income, which would make medium-term rating fundamentals positive. Dividends can be used to save or pay for additional expenses, Jeremy Zook said. It can provide signals about the government's fiscal priorities. Fitch has assigned India a 'PBB' rating with a stable outlook. According to media reports, a second rating agency, Moody's Ratings, concluded that the financial impact of RBI's dividend transfer will be determined by bringing in these additional sources. Moody's Ratings senior vice-president Cristian de Guzman said on the one hand the government would exercise control over spending to help it meet its deficit target. This will reduce borrowing requirements, thereby freeing up money in the market for other purposes. He said the government can use this additional money for new policies and initiatives. Dividend is 0.35 percent of GDP According to media reports, global rating agency S&P Global Ratings said the Reserve Bank's additional dividend is 0.35 percent of gross domestic product (GDP). India may get 'rating support' over time if windfall dividends are used to reduce fiscal deficit. S&P Global Ratings analyst Yiphern Phua said NSE's market capitalization reached $5 trillion for the first time. If this leads to full deficit reduction, we believe it will accelerate fiscal consolidation, which will provide valuation support over time. These three global rating agencies Fitch, S&P and Moody's have given India a low investment 'grade' rating with a stable outlook. Jio Financial seeks approval from shareholders to raise FDI limit to 49 percent RBI's dividend will determine new government's fiscal priorities: Ratings Agencies appeared first.