RBI approves payout of Rs 57,128 crore to govt amid widening fiscal deficit triggered by Covid-19 lockdown

The RBI board took the decision after reviewing the current "economic situation, continued global and domestic challenges, and the monetary, regulatory and other measures to mitigate the economic impact of COVID-19", said an NDTV report.

The development comes at a time when fiscal deficit hit a record Rs 6.62 lakh crore in the April-June period as Covid-19 lockdown affected revenue collection.

Fiscal deficit is a measure of the economic state of a country. It corresponds to the difference between total borrowings and total revenue of the government. A bigger expenditure based on borrowings will entail a bigger fiscal deficit.

The government had estimated dividend returns from RBI and other state-run financial institutions at Rs 60,000 crore in the annual budget.

The RBI maintained a Contingency Risk Buffer (CRB) at 5.5 per cent in its 584th meeting today.

According to PRS Legislative Research risk provisioning made from economic capital to cover monetary, fiscal stability, credit and operation risks is cumulatively referred to as the Contingent Risk Buffer (CRB).

Last year, RBI's board had made a record payout of Rs 1.76 lakh crore to the Central government, including a dividend of Rs 1.23 lakh crore and surplus capital of Rs 52,640 crore.

The receipts from various sources, including dividend from the central bank enables the government to meet its financial and fiscal deficit targets .