The Reserve Bank of India has fixed the limit of Ways and Means Advances (WMA) of the State for the current financial year at ₹1,728 crore.
This forms part of the ₹47,010 crore WMA limit fixed for States and Union Territories. The bank had provided higher WMA limit of ₹51,560 crore for States/UTs during the previous fiscal keeping in mind the uncertainties related to the COVID pandemic.
It had however, decided to revert to the WMA limits and over draft timelines, as recommended by an advisory committee with effect from April 1, but said that the norms prescribed were subject to review.
The WMA limit of several States, including neighbouring Andhra Pradesh, Maharashtra and Gujarat had been brought down in view of the lifting of COVID restrictions, but the quantum announced for the State remained the same as last year.
Ways and Means Advances is the temporary loan facility given by the RBI to the Central and State Governments introduced to meet mismatches in receipts and payments of the respective governments. The government can avail immediate cash from the RBI if required but it should return the amount within 90 days with interest charged as per the existing repo rate.
The RBI said that the States had been able to manage the financial stress caused by COVID primarily through a mix of expenditure compression and additional open market borrowings besides the financial accommodation provided by the Apex Bank through special drawing facility and overdraft.
The RBI issued guidelines for special drawing facility as well as overdraft. The SDF availed by the State governments would continue to be linked to the quantum of their investments in marketable securities issued by the Central Government, including the Auction Treasury Bills.
