Financial accommodation: RBI’s committee recommends 11.2% increase in States’ avg WMA limit
AI Summary
The proposed increase in Ways and Means Advances (WMA) limits for Indian states reflects a growing recognition of the need for enhanced liquidity support amid rising budget sizes. For retail investors, this could signal potential stability in state finances, which may indirectly benefit sectors reliant on government spending, such as infrastructure and public services. However, the emphasis on reducing over-dependence on liquidity support indicates a shift towards fiscal discipline, which could lead to more sustainable economic growth in the long run.
Considering States’ growing budget size, which could lead to higher liquidity support requirement from the Reserve Bank of India, there is a case for increasing the Ways and Means Advances (WMA) limits of the States, according to the recommendations of the central bank’s Advisory Committee.
The Advisory Committee on WMA to State governments, which was set upon April 30, 2026 to review the existing WMA Scheme for the State governments and to examine other related issues, proposed revision in aggregate WMA limit for the States to ₹67,839 crore from the existing limit of ₹61,008 crore, an increase of 11.2 per cent over the current limit.
Original Article
Published on Hindu BusinessLine
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This is a economy news update from Hindu BusinessLine, published on 29 September 2026.
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