MUMBAI, May 22 Reuters The board of India39;s central bank approved a record surplus transfer of 2.11 trillion rupees 25.3 billion to the government for the fiscal year that ended in March, sharply above analysts39; and government projections.

The government had budgeted a dividend of 1.02 trillion rupees from the Reserve Bank of India, staterun banks and other financial institutions, interim budget estimates for the fiscal year 202425 show.

For FY23, the RBI transferred 874.16 billion rupees to the government.

Higher interest rates on both domestic and foreign securities, significantly higher gross sale of foreign exchange and little impact from the central bank39;s liquidity operations possibly lead to such a whopping dividend, said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank.

We expect such a windfall to help fiscal deficit ease by 0.4 in FY25. Scope for lower borrowing being announced in the upcoming budget will now provide significant respite to the bond markets, she added.

India39;s benchmark 10year bond yield dropped five basis points to 6.99 after the announcement, its lowest level in nearly a year.

The bank39;s board reviewed the global and domestic economic scenario, including risks to the outlook, the statement added.

The RBI board also decided to raise the contingency risk buffer CRB to 6.5 from 6 previously as the economy remains robust and resilient, it said.

The higher dividend represents additional fiscal revenue of 0.4 of GDP, Gaura…