The Centre is set to receive a significant boost in its non-tax revenue for the fiscal year 2022-23 (FY23) from both public sector banks (PSBs) and the Reserve Bank of India (RBI). The dividend income is expected to reach Rs 13,804 crore, marking a substantial increase of nearly 58 percent compared to the previous fiscal year. This surge in dividend income can be attributed to the healthy profits and strong capital positions reported by select PSBs during FY23.
Dividend Income from PSBs
According to a report by BusinessLine, three out of the twelve PSBs declared a three-digit dividend in percentage terms during FY23. These banks include the State Bank of India (SBI), Bank of Baroda, and Canara Bank. The State Bank of India reported a remarkable standalone net profit of Rs 50,232 crore, an all-time high for the bank. Consequently, SBI declared a dividend of 1,130 percent of face value, significantly surpassing its dividend declaration from the previous year, which stood at 710 percent. Bank of Baroda declared a dividend of 275 percent, while Canara Bank declared a dividend of 120 percent.
Furthermore, six other PSBs declared dividends ranging from four to 86 percent. However, three PSBs, namely Central Bank of India, Indian Overseas Bank, and Uco Bank, did not declare any dividends for FY23. The substantial dividend income from the PSBs, particularly from SBI, Bank of Baroda, and Canara Bank, will contribute significantly to the Centre’s non-tax revenue for the fiscal year.
Dividend Income from RBI
In addition to the dividend income from PSBs, the Centre will also receive a higher dividend from the Reserve Bank of India (RBI). The RBI recently announced a dividend payout of Rs 87,416 crore, nearly triple the amount paid in the previous year. This dividend payout surpasses the expectations outlined in the Union Budget 2023-24, where the Centre anticipated a dividend of Rs 48,000 crore from the RBI.
For the accounting year 2021-22, the dividend payout by the RBI amounted to Rs 30,307 crore. However, in FY23, the Centre is set to receive a substantially higher dividend of Rs 87,416 crore. This surge in dividend income from the RBI, coupled with the significant dividend income from the PSBs, will provide a significant boost to the Centre’s non-tax revenue for the fiscal year.
Impact on Centre’s Non-Tax Revenue
The aggregate dividend income from both PSBs and the RBI will greatly surpass the Centre’s expectations for FY23. The Centre had estimated a dividend income of Rs 48,000 crore from the RBI, but the actual payout of Rs 87,416 crore exceeds this projection significantly. Additionally, the dividend income of Rs 13,804 crore from PSBs is nearly 58 percent higher than the dividend received in the previous fiscal year, which amounted to Rs 8,718 crore.
As a result, the Centre’s total dividend income from the RBI and public sector financial institutions for FY23 stands at Rs 40,953 crore, which falls short of the budget estimate of Rs 73,948 crore. Despite this shortfall, the Centre will still enjoy a substantial increase in its non-tax revenue due to the higher-than-expected dividend payouts from the RBI and select PSBs.
Conclusion
The Centre is set to benefit from a significant boost in its non-tax revenue for FY23, primarily driven by the dividend income from PSBs and the RBI. With three PSBs declaring three-digit dividends and the RBI’s substantial dividend payout, the Centre’s non-tax revenue is projected to reach Rs 13,804 crore from PSBs and Rs 87,416 crore from the RBI. While the total dividend income of Rs 40,953 crore falls short of the budget estimate, it still represents a substantial increase compared to the previous fiscal year. This unexpected windfall will provide the Centre with additional resources to support its fiscal initiatives and contribute to economic growth.
