Reserve Bank of India (RBI) has reviewed the Limits of Way and Means Advances for Center and States/UTs.
Under Section 17(5) of RBI Act, 1934, the RBI provides Ways and Means Advances (WMA) to the central and State/UT governments.
WMA is a temporary liquidity arrangement with the central bank, which enables the centre and the states to borrow money up to 90 days from the RBI to tide over their liquidity mismatch between its inflow of revenues and outflow of expenditure.
A higher limit provides the government flexibility to raise funds from RBI without borrowing them from the market.
Important Info :
For central Government: Recently, The Government of India increased the ceiling on WMA with RBI by 60 per cent to Rs 1.20 lakh crore (from Rs 75,000 crore last year) to tide over the cash flow mismatch in FY21 expected from higher spending to combat the spread of COVID-19.
For States/UTs: RBI had constituted an Advisory Committee (Chairman: Shri Sudhir Shrivastava) to review the WMA limits for States/UTs. Pending submission of the final recommendations by the Committee, it has been decided to increase their WMA limit by 30 %.
Source : Indian Express