The Reserve Bank of India (RBI) has kept the dividend to the Centre for 2000-01 (July-June) unchanged from the previous year's level of Rs 9,350 crore.
Analysts said the dividend was in line with the market expectation, and would keep the RBI away from conducting any auctions for the time being.
Prices of government securities went up by 10-15 paise immediately after the announcement of the dividend. However, analysts said the sentiment will not last long.
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The dividend from the RBI to the government took a jump last year as it increased to Rs 9,350 crore from Rs 4,479 crore in 1998-99.
Siddharth Mathur, head of research, J P Morgan Securities India Pvt Ltd, said: "The dividend payment of 1999-2000 was much above the expectation, but this time we expected a dividend in the Rs 9,000-10,000 crore range."
"After receiving the payment from the apex bank, theoretically the Centre will not require funds till September. However, in order to manage the government borrowing programme better and mop up excess liquidity from the market, the RBI may conduct an auction in the last week of August," he added.
The ways and means advances (WMA) to the government as on August 3 stood at Rs 15,332 crore.
But the twin auction of Rs 6,000 crore on August 8 has pulled it below the upper limit of Rs 10,000 crore, analysts hope. WMA is not expected to cross the limit again this month, they said.
M R Madhavan, vice-president, research, Bank of America, said: "I do not see any auction within next week as the government will not need any fund after receiving the dividend."
The announcement of dividend is unlikely to have any impact on the money market.
"As the announcement is in line with the market expectations, it will give a marginal boost to the government security market, but will fail to cause any major rally," Mathur of J P Morgan said.