ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 19 April. Click Here for more information.
ForumIAS Answer Writing Focus Group (AWFG) for Mains 2024 commencing from 24th June 2024. The Entrance Test for the program will be held on 28th April 2024 at 9 AM. To know more about the program visit: https://forumias.com/blog/awfg2024
News:The government has increased the limit on Ways and Means Advance (WMA) by 60% to support the cash flow mismatch expected from higher spending to combat the spread of COVID-19.
Facts:
- Ways and Means Advances(WMA) Scheme was introduced in 1997.
- Purpose: These are temporary loan facilities provided by the Reserve Bank of India(RBI) to the central and state governments to meet mismatches in the receipts and payments.
- Interest Rate:It is currently at the existing repo rate and the tenure is for three months.However, if the tenure is extended,it will be treated as an overdraft which is charged above repo rate.
- Limits for WMA:They are decided by the government and RBI mutually and revised periodically.
- Types of WMA: a) Special WMA: It is extended against the collateral of the government securities held by the State Government and b) Normal WMA: It is based on a three-year average of actual revenue and capital expenditure of the state.It is not collateral based.
