Ways and Means Advances

Why in news?

• The government increased the ceiling on its temporary loan facility with the Reserve Bank of India — known as Ways and Means Advance (WMA) — by 60 per cent to tide over the cash flow mismatch in FY21 expected from higher spending to combat the spread of COVID-19.

About:

• Answering a query on whether the Centre will issue securities directly to the RBI to finance COVID-19 related extra spending, he said: “Certainly, that’s not in the borrowing plan.”

• The WMA facility enables the government to take a temporary short term loan from the central bank, mainly to address the mismatch between its inflow of revenues and outflow of expenditure.

• A higher limit provides the government flexibility to raise funds from RBI without borrowing them from the market.

• The government will do “whatever is required” for poor and vulnerable sections and for the resurgence of the industry, Chakraborty said, without specifying whether the fiscal deficit target for 2020-21 will be breached or not.

• The government has announced a Rs 1.7 lakh crore package to provide income support, free food and other facilities to the poor to help them during the 21-day national lockdown.