Question

The main purpose of WMA is to

• A. Finance long-term government projects
• B. Bridge temporary mismatches between government receipts and payments
• C. Fund private companies
• D. Issue new currency notes

Answer 1

Answer:

B. Bridge temporary mismatches between government receipts and payments

Government receipts (like taxes) and payments (like salaries, pensions, interest) do not occur at the same time. This can create temporary cash shortages. To manage this, RBI provides WMA to bridge the temporary mismatch between receipts and payments. WMA are not meant for long-term projects and must be repaid within a short period, usually within 90 days.