Ways & Means Advances Touch Rs 1,514 Crore

The Centre has availed of ways and means advances from the Reserve Bank of India (RBI) for the third consecutive week. During the week ended February 27, the governments use of these advances under this head has increased by Rs 860 crore to Rs 1,514 crore.

Recourse to ways and means advances by the government has steadily gone up from Rs 408 crore on February 13 to Rs 654 crore on February 20 and now to Rs 1,514 crore. This suggests that there is a continued mismatch between receipts and expenditure of the government. Unlike the earlier system of ad hoc treasury bills, the ways and means advances is not a permanent source of funding. The government will have to repay the balance under this head within 10 consecutive working days of drawing the advance, as per the agreement signed between the Centre and the RBI last year.

The year-on-year growth in money supply was 16.4 per cent as on February 13. Advances by the scheduled commercial banks to the commercial sector have increased 15.03 per cent in the current financial year while aggregate deposits have increased 14.31 per cent.

The pick-up in credit off take continues well into the fourth quarter. Bank credit increased by Rs 4,483 crore with non-food credit increasing by Rs 4,483 crore during the fortnight ending February 27.

During the same fortnight, aggregate deposits increased by Rs 6,950 crore while investments in government and other approved securities increased by Rs 879 crore.

During the week ended March 6, the RBIs foreign currency assets decreased by $19 million while the value of gold held by it increased by $97 million. Consequently, the Reserve Banks foreign exchange reserves increased by $78 million to $27,442 million, consisting of foreign currency assets worth $24,025 million, gold worth $3,413 million and special drawing rights worth $4 million.