RBI Hikes Telangana's Ways and Means Advance Limit to Rs 2,407 Crore
Concerns have been raised by the Comptroller and Auditor General of India (CAG) recently regarding Telangana’s dependence on WMA. The CAG observed that the state has increasingly relied on advances from the RBI to bridge short-term gaps between revenue and expenditure.
Hyderabad: The Reserve Bank of India has enhanced the ‘ways and means advance’ (WMA, a temporary loan) limit for the Telangana government to Rs 2,407 crore with effect from January 9, providing major relief to the state that is struggling with short-term cash flow management.
The increase comes in line with the RBI’s decision to revise the aggregate WMA ceiling for all state governments and Union Territories to Rs 61,008 crore from the existing Rs 60,118 crore. Consequently, Telangana’s individual limit has been raised from Rs 2,300 crore to Rs 2,407 crore, strengthening its ability to meet immediate expenditure requirements during periods of temporary mismatch between receipts and payments.
WMAs are temporary loans extended by the RBI to state governments and UTs to help them overcome short-term liquidity constraints. These advances are meant to bridge timing gaps in cash inflows and outflows and are not intended to serve as a long-term financing mechanism. The amount availed under WMA must be repaid within 90 days, and the interest charged is aligned with the prevailing repo rate. The facility allows governments to maintain smooth functioning of essential services and avoid disruptions in routine expenditure due to cash shortages.
Over the years, Telangana’s WMA limit has witnessed substantial growth. In 2014, the ceiling stood at Rs 550 crore and was increased to Rs 1,080 crore in 2016, marking a rise of nearly 96.4 per cent based on the sate’s revenue profile and capital expenditure. It was further enhanced to Rs 1,728 crore in 2020, before reaching the present level of Rs 2,407 crore in 2026. The steady escalation highlights both the expansion of the state’s financial operations and the growing need for liquidity support to manage cash flow fluctuations.
Concerns have been raised by the Comptroller and Auditor General of India (CAG) recently regarding Telangana’s dependence on WMA. The CAG observed that the state has increasingly relied on advances from the RBI to bridge short-term gaps between revenue and expenditure.
Telangana was among the three states, along with Rajasthan and Andhra Pradesh, that accounted for 62 per cent of the total WMA usage, including overdrafts, during 2023–24. The duration of WMA utilisation in Telangana extended to 349 days in 2023-24, indicating near-continuous dependence throughout the financial year.
The CAG pointed out that even though Telangana recorded a revenue surplus during the 2023-24 fiscal, the extensive use of WMA reflected persistent mismatches between inflows and outflows of funds. Such reliance, including by States in revenue surplus, signals challenges in cash flow management and highlights underlying fiscal pressures.
