Panel proposes raising RBI's ways and means advances corpus by 11.2% to Rs 67,839 crore
The panel has also recommended an annual review of the WMA corpus capping annual upward revision at 4%. The extent of upward revision could be based on the last three years of accounts while there would be no reduction in the existing limit.
A panel assessing the Reserve Bank of India's support to state governments via ways and means advances has proposed raising the liquidity corpus by 11.2% to Rs 67,839 crore. The committee, headed by Karnataka's former additional chief secretary ISN Prasad, also supports state-specific limits based on their revenue receipts.
The panel recommends an annual review of the WMA corpus, with a cap of 4% annual upward revisions. The next revision would be based on the accounts from the past three years, with no reductions allowed. Currently, the maximum borrowing limit across all state governments and union territories under the WMA scheme is Rs 61,008 crore, effective from January 9, 2026.
The committee suggests reducing continuous overdraft days from 14 to 10 and quarterly overdraft limit days from 36 to 30 to deter excessive borrowing. They also propose increasing the Special Drawing Rights (SDR) limit against eligible investments in the Consolidated Sinking Fund (CSF) from the current 50% to 75%.
WMA is used by state governments and union territories to manage mismatches between their receipts and payments. The central bank provides collateralized liquidity support through SDRs, which are backed by contributions to CSF or GRF and investments in Auction Treasury Bills.
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- Panel proposes raising RBI's ways and means advances corpus by 11.2% to Rs 67,839 crore economictimes.indiatimes.com
