Huge relief to 'locked down' Telangana State
Hyderabad: India's apex bank- RBI's latest decision to increase the Ways and Means Advance (WMA) limit of the state governments to 60 per cent from 3...
Hyderabad: India's apex bank- RBI's latest decision to increase the Ways and Means Advance (WMA) limit of the state governments to 60 per cent from 30 per cent has come as a big breather to Telangana which is facing precarious financial situation even before the lockdown period. After getting Rs 980 crore devolution from the Union government on Monday, the TS government will get Rs 1800 crore from the RBI in a day or two from the hike of WMA limit.
To tide over the mismatches in the cash flows mainly between revenue receipts and expenditure, the RBI permitted all states to borrow from the top financial institution at the higher limit of 60 per cent. On April 1, the RBI announced 30 per cent increase in withdrawal limits. After the state's financial status has gone bad to worse, the RBI increased the WMA limit to 60 per cent. Finance department officials said the state's finances were in a mess after steep fall in revenues under the impact of deadly Coronavirus. The increase of WMA limit will help the government to get nearly Rs 800 crore additionally through market borrowing from the RBI with a lower interest rate of 4.4 per cent.
In all, Telangana will get Rs 1800 through wage and means advance in a short period. The government will have to repay not later than 3 months from the date of making of the WMA. The hiked advance limit can be availed by the states till September. "In a day or two, government will get the advance from the RBI," a senior official said, however, government is not willing to go for OD (Over Draft) at this part of time.
The TS government already raised Rs 2,000 crore through bonds from the RBI in the second week of April to meet the emergency needs mainly strengthening the medical facility to provide growing number of corona patients and pay the salaries of employees. Soon after the announcement of the lockdown in March, the government has decided to mobilise huge funds through bonds from the government owned financial institutions, officials said, adding that the release of Rs 980 crore devolution by the Centre also gave a relief to the cash strapped state in the crisis.
The government is also planning to insist for early release of state devolution from the Centre. Telangana is entitled to avail Rs 16,800 crore as devolution in the new financial year. The Centre should release Rs 1,400 crore every month but received only Rs 982 crore in April in the first of the new financial year.