An RBI-appointed committee has recommended increasing the aggregate Ways and Means Advances limit for states by 11.2% to ₹67,839 crore to help manage temporary cash-flow mismatches as state budgets expand. Pasted text
A Reserve Bank of India-appointed committee has recommended raising the aggregate Ways and Means Advances (WMA) limit available to state governments from the existing ₹61,008 crore to ₹67,839 crore.
The proposed increase of 11.2% is intended to reflect the growing size of state budgets and provide states with greater flexibility in managing temporary mismatches between their receipts and expenditure.
The RBI has provided WMA facilities to state governments since 1938 as a mechanism for addressing temporary cash-flow mismatches.
The central bank had earlier revised the aggregate WMA limit from ₹32,225 crore to ₹47,010 crore with effect from April 1, 2022. It was subsequently increased following recommendations from a group of state finance secretaries.
The latest Advisory Committee, chaired by I S N Prasad, analysed fiscal parameters including total expenditure and revenue receipts to determine an appropriate basis for calculating WMA limits.
The committee concluded that state-wise WMA limits should be determined using revenue receipts rather than total expenditure.
For calculating the revised limits, the panel used adjusted revenue receipts based on accounts-level data for 2022-23 to 2024-25. The calculation adjusts revenue receipts for lottery-related expenditure and net expenditure on natural calamities where applicable.
The committee also suggested that the RBI consider revising WMA limits annually using the methodology recommended in its report.
It further proposed that the next committee reviewing WMA arrangements for state governments be constituted after the release of the Seventeenth Finance Commission report.
The current Advisory Committee on Ways and Means Advances to State Governments was constituted by the RBI on April 30, 2026 to review the existing WMA framework and related issues. Pasted text
