The Advisory Committee set up by the Reserve Bank of India (RBI) in April 2026 to review the existing framework on Ways and Means Advances (WMA) for state governments and other related issues submitted its report on September 29, 2026. To address short-term liquidity pressures, the RBI provides repo-rate linked liquidity support through the Special Drawing Facility (SDF), WMA and Overdraft (OD) facilities to 27 states (excluding Sikkim) and three Union Territories (UTs).

The key changes recommended by the Committee include fixing the state-wise WMA limits based on their audited revenue receipts of last three fiscal years (after making certain adjustments), instead of the current practice of using adjusted revenue expenditure as a base. Using the adjusted revenue receipts as a base, the aggregate WMA limit is proposed at Rs. 678 billion, ~11% higher than the existing limit of Rs. 610 billion. Moreover, it is proposed that the RBI could consider annual revision of WMA limits subject to caps on the extent of upward revision in a fiscal. If these changes are accepted and implemented by the RBI, it would increase the resource window for the state governments to bridge any temporary mismatches between their revenues and expenditures through WMA and avoiding higher-than-indicated market borrowing, most likely at a high rate.

Based on the number of days of OD usage by states, the Committee has proposed to reduce the number of consecutive days that a state can be in OD to 10 from 14 and maximum days in OD in a quarter to 30 from 36 days. This should encourage those states that have been availing the OD facility for a sizeable period in recent years to improve their fiscal management.

EXHIBIT: Aggregate number of days liquidity facilities were used by all states/UTs

Source: Reserve Bank of India (RBI); ICRA Research