The RBI released the report of the Advisory Committee on Ways and Means Advances (WMA) to State Governments chaired by I S N Prasad. The committee reviewed state-wise WMA limits and financial accommodation mechanisms.
RBI Publishes Advisory Committee Report on State WMA
The Reserve Bank of India has published the report of the Advisory Committee on Ways and Means Advances (WMA) to State Governments, chaired by Shri I S N Prasad, former Additional Chief Secretary of Karnataka. The committee was tasked with reviewing state-wise WMA limits and the financial accommodation framework available to state governments, a critical component of sub-national fiscal management.
The WMA mechanism allows states to meet temporary mismatches in cash flows by availing overdraft facilities from the RBI. The committee’s terms of reference included evaluating the adequacy of current limits, assessment criteria, and possible improvements in the framework to enhance fiscal prudence and borrowing efficiency. While the full recommendations are yet to be disclosed, the publication of the report signals an upcoming policy revision in state-level liquidity support mechanisms.
For state finance departments and banking institutions managing state securities, the committee’s recommendations may influence the design of future WMA limits and interest cost implications. The report could also impact the issuance patterns of state government securities and market expectations around borrowing programs. Regulatory and public finance practitioners should monitor follow-up actions from the RBI and Ministry of Finance.