The Reserve Bank of India (RBI) has approved a record transfer of Rs 2.1 lakh crore as a dividend to the Government of India for the fiscal year 2024. This amount is a substantial increase from the previous year and is the highest ever transfer in the history of RBI. This dividend is expected to significantly bolster the government's resources, allowing it to meet its fiscal deficit targets for FY25 without additional borrowing, which in turn can stimulate economic growth and create jobs.

The decision to transfer this amount was made during the 608th meeting of the RBI's Central Board, which also decided to raise the contingency risk buffer to 6.5% from 6%, reflecting confidence in the robustness of the Indian economy. This surplus transfer is largely attributed to higher interest rates on domestic and foreign securities, significant gross sales of foreign exchange, and limited drag from liquidity operations compared to the previous year.

This windfall from the RBI is crucial as it helps the government manage its finances better by providing additional funds that can be used for public spending, reducing fiscal deficits, or managing debt. It also provides the government more flexibility in managing economic policies without relying heavily on market borrowing, which can help keep bond yields lower and stabilize the financial markets.