An RBI committee has recommended raising the aggregate Ways and Means Advances (WMA) limit for states by 11.2% to Rs 67,839 crore, citing the growing size of state budgets.
The Reserve Bank of India (RBI) has been providing Ways and Means Advances to state governments since 1938 to help manage temporary mismatches between their cash receipts and payments. The committee has proposed increasing the aggregate WMA limit from the existing Rs 61,008 crore to Rs 67,839 crore. The Economic Times
The Advisory Committee on Ways and Means Advances to State Governments, headed by I S N Prasad, examined various fiscal parameters including total expenditure and revenue receipts while reviewing the basis for calculating WMA limits. The panel said state-wise limits should be based on revenue receipts rather than total expenditure. The Economic Times
For the revised limits, the committee used adjusted revenue receipts based on accounts-level data for 2022-23 to 2024-25. The adjustment considers revenue receipts after excluding lottery-related expenditure and adding net expenditure on natural calamities where positive. The committee also suggested that the RBI undertake an annual exercise to revise WMA limits using the recommended methodology. Bazar Observer
The advisory committee was constituted by the RBI on April 30, 2026, following discussions at the 35th Conference of State Finance Secretaries held in September 2025. The panel has also recommended that the next committee reviewing WMA for state governments be constituted after the release of the Seventeenth Finance Commission report. Bazar Observer
