An RBI-appointed panel has recommended an 11.2% increase in the Ways and Means Advances (WMA) limit for states, raising it to ₹67,839 crore. This move aims to provide states with greater flexibility to manage temporary cash flow mismatches, amidst broader discussions on India's liquidity position and potential interest rate hikes.
₹67,839 crore
New WMA Limit
FY25: ₹61,000 crore→₹67,839 crore
📊 One chart explains it
Ways and Means Advances (WMA) Limit for States
Takeaway: The WMA limit for states has shown a consistent upward trend, providing increasing financial flexibility.
⏳ Time Machine
How today’s news fits into the bigger picture
April 2020
COVID-19 WMA Limit Hike
The RBI significantly increased WMA limits for states by 60% to help them cope with severe cash flow disruptions caused by the COVID-19 pandemic and associated lockdowns, highlighting the facility's role as an emergency buffer.
October 2020
Committee Recommends Higher Limits
An advisory committee on WMA submitted recommendations for higher limits, suggesting adjustments based on states' actual expenditure patterns and the need for more realistic financial support.
March 2022
WMA Limit Revision for FY23
The RBI revised the WMA limits for states, setting them at ₹51,560 crore for the fiscal year 2022-23, reflecting a regular periodic adjustment based on ongoing financial assessments.
March 2024
Limit Increased for FY25
The WMA limit was further increased to ₹61,000 crore for the fiscal year 2024-25, continuing the trend of gradual adjustments to meet the evolving financial requirements of state governments.
Today
An RBI-appointed panel recommended an 11.2% increase in the Ways and Means Advances (WMA) limit for states, raising it to ₹67,839 crore.
What happens next?
The RBI's Monetary Policy Committee is expected to review and potentially approve the higher WMA limits, offering states greater financial flexibility, while also considering broader interest rate adjustments.
The Reserve Bank of India (RBI) has received a recommendation from an expert panel to increase the Ways and Means Advances (WMA) limit for state governments by **11.2%**, pushing it to **₹67,839 crore**. This enhanced facility provides states with a crucial buffer to manage temporary shortfalls in their finances without resorting to more expensive market borrowings. The recommendation comes as the central bank navigates a complex liquidity environment, with some analysts, like Nomura, projecting potential repo rate hikes in the coming months. The higher WMA limit aims to ensure smooth financial operations for states.
💭 If you're wondering…
WMA is a short-term, temporary loan facility from the RBI, typically cheaper. Market borrowings involve issuing bonds to the public, which are longer-term and usually have higher interest rates.
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