Silently with out any debate in indian Public porum Reserve Bank of India (RBI), has acceded with the Government of India, and has revised the limit for Ways and Means Advances (WMA) for the remaining part of the first half of FY21 (April 2020 to September 2020) to ₹2-lakh crore.
Earlier during March 31, the WMA limit for the first half of FY21(April 2020 to September 2020) was upped to ₹1.20-lakh crore against ₹75,000 crore in the year-ago period.
This move and if monies been taken out then could affect increase in fiscal defecit says economists
The hike in the limit comes in the wake of expectation that the Central government will step up expenditure on the social sector, including health and sanitation, following outbreak of the pandemic.
The central bank provides financial accommodation to the government to tide over temporary mismatches in the cash flow of its receipts and payments as WMA.
This is intended to provide a cushion to the government to carry on its essential activities and normal financial operations
It is important to note last finacial year immediate after Indian General election 2019 RBI has given away 1.7 lakhs corore to Modi led Indian government .
The resignation of previous RBI government Patel is due to the difference of opinion with Modi led government over release of RBI reserves . Then Modi government replaced him with Mr. Sakthi das who played a crucial role as Economic Affairs Secretary during demonetisation days in 2016.
