Wma Limit At Rs12000cr In First Half

The limit under the system of ways and means advances (WMA) has been set taking into account the income and expenditure patterns of the government. For the first half of the financial year April to September the limit has been fixed at Rs 12,000 crore, while for the second half, it is Rs 8,000 crore.

In the first half, the governments revenue lags expenditure. This is borne out by the fact that the incremental level of ad hocs has been at a higher level in the beginning of the year. Consequently, the WMA limit for the first half is higher.

 

In the second half, the incremental level of ad hocs declines gradually. It has also been observed that the quantum of borrowing by the government in the first half is higher than that in the second half.

Under the agreement signed between the government and the Reserve Bank of India, during the transition period up to March 1999, the government will be able to avail of an overdraft for a period beyond 10 working days.

The interest rate on the WMA will be 3 per cent below the average of the implicit yield at the cut-off prices of 91-day treasury bill auctions in the previous quarter. In the event of the government exceeding the limits, it will have to shell out 1 per cent more.