Ways and Means Advances
Debt & Borrowing Advancedअल्पावधि उधारी
Definition
Ways and Means Advances (WMA) are temporary loans given by the RBI to the Central and state governments to bridge temporary mismatches between receipts and expenditure. WMA must be repaid within 90 days. If the government exceeds the WMA limit, it enters overdraft. WMA interest is charged at the repo rate.
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Why Ways and Means Advances Matters
Understanding ways and means advances is essential for anyone following government finances, preparing for competitive exams, or analysing India's economic policy. This concept directly affects how the government allocates resources and plans its fiscal strategy.
In the context of India's Union Budget 2026-27, with a total size of Rs 53.47 lakh crore, terms like ways and means advances help citizens and analysts evaluate whether the government is on the right fiscal path. The numbers in the budget are only meaningful when one understands the underlying concepts.
For UPSC aspirants, ways and means advances is frequently tested in both Prelims and Mains, particularly in Paper III (Economic Development). For CA and MBA students, this concept appears in public finance and macroeconomics courses.
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