Govt raises Rs 654 cr via WMA

MUMBAI, March 7: The central government's Ways and Means Advances (WMA) account has gone up to touch Rs 654 crore for the week-ended Februar...

MUMBAI, March 7: The central government’s Ways and Means Advances (WMA) account has gone up to touch Rs 654 crore for the week-ended February 20. The government had resorted to short-term borrowings for the first time in the current financial year when it borrowed Rs 408 crore for the fortnight ended February 13, 1998.

The centre had decided to phase out ad-hoc treasury bills in April 1997 and decided to fund its short-term borrowings through ways and means advances.Analysts said that the government’s recourse to WMA is to meet the revenue shortfall in the last part of the current fiscal. "Although plan expenditure is not higher, the fiscal deficit target will be overshot. So the government has to fund this shortfall through WMA," an analyst in a leading foreign brokerage house said.

The RBI restricts the average half yearly government’s borrowing through WMA to Rs 10,000 crore. While Rs 12,000 crore has been fixed for the first half, Rs 8,000 crore has been fixed for the second half. However thegovernment’s resort to WMA is well below the stipulated average during the current fiscal. In the second half it has just started borrowing.

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The interest rate for such borrowing is pegged at 300 basis points lower than the "calculated rate" which is the average implicit yield at the cut off prices of the 91-day treasury bills held in the previous quarter.

The total foreign exchange reserves grew by $6 million during the week ended February 27, 1998. Forex reserves rose to $27.36 million of which foreign currency assets stood at $24.04 million.

During the period, there was a fall in the growth of bank credit. The bank credit which grew by Rs 5,160 crore (1.7 per cent) during the fortnight ended January 30, 1998, increased by only Rs 1,451 crore (0.5 per cent) during the fortnight ended February 13, 1998.

This contributed to the rise in investments of banks which grew by Rs 2,299 crore (1.1 per cent) during the fortnight. The investments during the fortnight ended January 30, 1998 had fallen by Rs 3,854crore (1.8 per cent). The aggregate deposits of the banking sector rose by 0.6 per cent (Rs 3,375 crore) against a growth of 0.5 per cent (Rs 3,054) during the previous fortnight.

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