Consider the following statements regarding Ways and Means Advances (WMA) in India:
- The interest rate on Normal WMA is equivalent to the repo rate.
- Special WMA is secured by government securities held by the state government.
- The WMA limit for state governments is determined solely by the Reserve Bank of India.
- WMA is a permanent solution for long-term fiscal imbalances in the state budget.
Which of the above statements are correct?
Explanation: Statements 1 and 2 are accurate. The interest rate on Normal WMA matches the repo rate, while Special WMA is indeed backed by government securities. Statement 3 is incorrect because the WMA limit is determined in consultation with the government. Statement 4 is also incorrect as WMA is designed as a short-term measure.
Explanation: Statements 1 and 2 are accurate. The interest rate on Normal WMA matches the repo rate, while Special WMA is indeed backed by government securities. Statement 3 is incorrect because the WMA limit is determined in consultation with the government. Statement 4 is also incorrect as WMA is designed as a short-term measure.
