World · India Bureau
RBI Panel Proposes Sharp Hike in States' Borrowing Limit to Rs 67,839 Crore
An RBI advisory panel has recommended raising the aggregate Ways and Means Advance limit for Indian states by 11.2 percent, significantly expanding their short-term borrowing capacity. The proposed increase reflects growing fiscal pressures faced by state governments across the country.
LSN India ·
The Reserve Bank of India's advisory committee has put forward recommendations to substantially increase the Ways and Means Advance (WMA) limit available to state governments, according to official sources. The proposal seeks to raise the aggregate WMA ceiling to Rs 67,839 crore, representing an 11.2 percent increase from current authorized levels.
This move builds on previous adjustments made by the RBI following recommendations from an earlier advisory committee chaired by Sudhir Shrivastava. In that instance, the central bank had revised the aggregate WMA limits for states from Rs 32,225 crore to Rs 47,010 crore, demonstrating the RBI's ongoing efforts to calibrate liquidity management tools for state finances.
WMA facilities serve as crucial short-term borrowing mechanisms enabling states to bridge temporary cash flow mismatches. The periodic revision of these limits reflects the RBI's assessment of evolving fiscal requirements across states and aims to ensure adequate liquidity support during periods of revenue shortfall or unexpected expenditure demands.
The recommendation comes at a time when state governments continue to balance development spending with fiscal consolidation objectives. Enhanced WMA access is expected to provide greater flexibility in managing day-to-day treasury operations without resorting to costlier market borrowings during temporary fund gaps.