Q. Consider the following statements regarding ways and means scheme:
1.It was introduced in 1992 to tackle fiscal crisis.
2.Under the scheme the government commits to the RBI about the amount of money it will give as part of its market-borrowing programme.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: B
Notes:

Explanation: The Ways and Means Advances (WMA) scheme commenced in 1997 under which the government commits to the RBI about the amount of money it will give as part of its market-borrowing programme, to bring transparency in public expenditure and to put political responsibility on the government.

The RBI will not be the primary subscriber to government securities in the future—committed way back in 1997.

Source: TMH Ramesh Singh