Indian Express explained 18th April 2020

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1)Ways and Means Advances: what is it, and how far will relaxation of limit help?

Premise:- The Reserve Bank of India (RBI), announced a 60% increase in the Ways and Means Advances (WMA) limit of state governments over and above the level as on March 31, with a view to enabling them “to undertake COVID-19 containment and mitigation efforts” and “to better plan their market borrowings”.

What exactly is Ways and Means Advances (WMA)?

Simply put, it is a facility for both the Centre and states to borrow from the RBI.

These borrowings are meant purely to help them to tide over temporary mismatches in cash flows of their receipts and expenditures. In that sense, they aren’t a source of finance per se. Section 17(5) of the RBI Act, 1934 authorises the central bank to lend to the Centre and state governments subject to their being repayable “not later than three months from the date of the making of the advance”.

Why have all these relaxations been made?

The reason is simple. Government finances are in a mess today. The lockdown has resulted in revenues drying up, and it is the states that are actually feeling the heat. With economic activity at a near standstill, there is hardly any money coming in from GST, petroleum products, liquor, motor vehicles, stamp duty or registration fee.

At the same time, the states are also incurring the bulk of the on-the-ground expenditures for combating the novel coronavirus.

These extend not only to purchases of testing kits, personal protective equipment and ventilators or deployment of healthcare and police personnel, but even to providing food, shelter and other relief measures to those worst hit by the lockdown.

2)White Label ATMs (WLAs):- Types of ATM:

  1. Bank ATM-   These are owned and operated by the respective bank. For Ex. SBI Bank ATM, ICICI Bank Atm
  2. Brown Label ATM-  When banks outsources the ATM operations to a third party, it is called brown-label ATm. They have logo of the bank.
  3. White Label ATM- They are owned by non-bank entities. Eg- Muthoot Finance ATM, TATA Indicash, etc. There is no bank logo.

3)Financial Year (FY) or Fiscal Year:-

The one year period for which financial statements of a government or a company is prepared is referred to as the financial year or fiscal year (FY).

Countries, depending on their institutional requirements, define their financial year (FY) different from their calendar year (which runs from 1 January to 31 December). India’s financial year runs from 1st April to 31st March of next year.

In short, a financial year may be represented as FY. Generally, in India, financial year 2016-17 would be abbreviated as FY 2016-17 in statutory documents.

However, following the American practice, some also use the nomenclature of FY 17 or FY 2017, which stands for the financial year ending 31 March 2017.

For income tax purposes, the year falling next to a financial year is known as Assessment Year. It is called so, because assessment of tax liability is done during that period, for the income corresponding to the previous financial year.

For instance, for the Fiscal Year 2016-17, the Assessment Year would be 2017-18.

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