The Reserve Bank of India's surplus transfers offer the government much-needed fiscal space, yet they are not without challenges. Critically examine the implications of the RBI's surplus transfers to the government.

RBI has transferred dividend to central government in FY25 boosting non-revenue receipt and helped achieve revenue and fiscal deficit target. RBI Dividend Policy: 1) Bimal Jalan committee recommended capital buffer of 4.8% to RBI 2) Balance transferred to government as dividend under RBI Act Significance of RBI Dividend: 1) Boost non debt revenue receipt of government. 2) Help meet Revenue deficit and fiscal deficit targets 4.7% of GDP 3) Higher profit of RBI due to holding in lower name and currency fluctuations led to higher dividend

Issues with RBI dividend transfers: 1) Fluctuation: RBI dividend is not sustainable source of revenue. 2) RBI may buffermaintained at lower end of suggested by Bimal Jalan committee. 3) RBI dividend reduce RBI surplus reserve. Threshold quark for economy. RBI is capacity to absorb shocks. 4) Mask deficiencies such as higher subsidy burden on higher expenditure. 5) Regular review of RBI capital structure Measures: 1) Higher HAK buffer at 8% 2) Better planning by RBI and some included in budget. Thus RBI higher dividend transferred cutting the economy but better planning and regulatory oversight is need at regular intervals