RBI panel recommends raising states' WMA ceiling to ₹67,839 crore and tighter borrowing schedules
A Reserve Bank of India advisory committee suggested increasing the aggregate Ways and Means Advances limit for state governments to ₹67,839 crore and urged more even distribution of market borrowings throughout the fiscal year.
An advisory committee to the Reserve Bank of India has put forward a plan to raise the aggregate Ways and Means Advances (WMA) limit for state governments to ₹67,839 crore, up from the existing ₹61,008 crore. The panel recommends annual reviews of state limits based on the most recent three years of financial data, with any yearly increase typically not exceeding 4 percent and no state’s limit falling below its current level.
While the WMA facility is intended to cover temporary cash-flow mismatches, the committee cautioned against its use for financing budget deficits. It also highlighted the problem of heavy borrowing concentration in the final months of the fiscal year, urging states to spread issuances more evenly and adopt the Benchmark Issuance Strategy. Further suggestions include reducing the maximum continuous overdraft period to 10 working days, lowering the quarterly overdraft cap to 30 days, and raising the proportion of Consolidated Sinking Fund investments that can be used to access the RBI's Standing Deposit Facility from 50 percent to 75 percent.
Why it matters
The changes could affect state financing costs and liquidity management across India's fiscal year.
In this story
