New Delhi, Jun 29 (KNN) The Reserve Bank of India (RBI) announced on Friday a significant increase in the aggregate Ways and Means Advances (WMA) limit for state governments and Union Territories. Effective July 1, 2024, the new limit will be Rs 60,118 crore, up fr0m the current Rs 47,010 crore.

WMA are short-term advances provided by the RBI to help governments manage temporary mismatches between receipts and payments.

This revision comes after recommendations fr0m a group formed by the central bank, which included select state finance secretaries.

The group analysed recent expenditure data fr0m states to inform their recommendations.

The last review of financial accommodation limits extended by the RBI to state governments and Union Territories through Special Drawing Facility (SDF), WMA, and Overdraft (OD) schemes occurred on April 1, 2022.

In addition to the WMA limit increase, the RBI stated that the SDF availed by state governments and Union Territories will continue to be linked to their investments in marketable securities issued by the government, including auction treasury bills.

This adjustment in the WMA limit reflects the RBI's ongoing efforts to ensure adequate liquidity for state governments while maintaining fiscal discipline.

(KNN Bureau)