Govt exhausts deposits; expenditure would be on rise before elections

Government exhausts deposits; experts say expenditure would be on the rise before elections

A heavily spending government in an election year seems to be running out of cash, but its banker, the Reserve Bank of India (RBI), extends a helping hand.

On Tuesday, the central bank auctioned Rs 200 billion of cash management bills of 70-day maturity and on Monday it increased the ways and means advances (WMA) limit for the central government by Rs 100 billion to Rs 700 billion.

The special instruments have come into play when the government’s deposits with the RBI are falling to pre-demonetisation levels, revenues are not increasing as expected, and committed expenditure pressure is mounting.

Cash