Srinagar, June 28: As the Reserve Bank of India (RBI) has announced to increase financial accommodation for States and Union Territories (UTs) by 28% to ₹60,118 crore, the temporary liquidity shortages in Jammu & Kashmir are expected to be addressed more effectively in the coming days.
Presently, Jammu & Kashmir’s current Ways and Means Advances (WMA) ceiling stands at ₹1815 crore as per the latest available reports. This is in the context of a significant budget allocation for 2024-25, where the overall expenditure is expected to be ₹118,728 crore, marginally higher than the previous fiscal year’s estimates.
Financial experts told Ziraat Times that this enhancement could assist J&K in managing their temporary mismatches in the cash flow provided the UT is able to meet the pre-conditions for such enhanced short term borrowing.
“The increase in financial accommodation by the Reserve Bank of India (RBI) by 28% to ₹60,118 crore for all States and Union Territories will likely provide Jammu & Kashmir with additional borrowing flexibility. For Jammu & Kashmir, this increased limit will be crucial in ensuring liquidity and financial stability, given the region’s ongoing development projects and financial commitments”, the expert requesting not to be named, said.
Experts believe that this elevated WMA ceiling should help Jammu & Kashmir manage its cash flow more effectively, allowing it to address immediate financial needs without resorting to more expensive borrowing options.
This will be particularly beneficial in light of the UT’s substantial debt obligations and developmental expenditures outlined in its budget.
Improved access to funds through WMA is also expected to provide greater fiscal stability for J&K UT, helping it manage its finances more effectively and avoid disruptions in public services, like pension and GP Fund payments for its employees, due to cash flow issues.
Experts also caution that while increased WMA limits provide greater financial flexibility, it is important for J&K UT to manage this borrowing prudently to avoid over-reliance on short-term borrowings, which can lead to fiscal stress if not managed properly.
