As speculation intensifies around a record-breaking dividend from the Reserve Bank of India to the Government of India, the optimism in markets is high. Bond yields are softening, liquidity is rising, and equity valuations are finding support. But beneath this surface calm lies a deeper unease: one that raises troubling questions about the blurred boundaries between fiscal management and monetary prudence.This year’s estimated payout, rumoured to be over ₹3 trillion, significantly exceeds the approximate ₹2.2 trillion budgeted for 2025-26. This has triggered euphoria in the market. Yields on 10-year government bonds have declined to 6.22% from 6.8% three months ago, reflecting hopes of reduced government borrowing and further monetary easing. Additionally, a surplus in banking system liquidity, driven by a decline in credit-deposit ratio and forex-related liquidity infusions by the central bank, has only reinforced the mood.
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