India’s central bank has announced a $24-billion windfall for the cash-strapped government, giving a much-needed boost to Prime Minister Narendra Modi as he seeks to kickstart growth in Asia’s third-biggest economy.
But the payout will likely stoke fresh concerns about the Reserve Bank of India’s independence following a standoff that has seen top officials quit amid accusations of government interference, agency reports.
Modi has come under increasing pressure to fire up the economy, which has slowed in each of the past three quarters — losing its status as the world’s fastest-growing — with unemployment at its highest since the 1970s.
The auto sector has been particularly badly hit, with car sales plunging in July for the ninth month running, while weak consumer spending and high taxes have hit demand for everything from biscuits to hair oil.
The RBI said it had approved a transfer of 1.76 trillion rupees ($24.4 billion) to government coffers, including a dividend of 1.23 trillion rupees and 526 billion rupees in excess reserves following the adoption of a new methodology for assessing market risk.