Explanation:

- RBI in consultation with the Central Government: The Reserve Bank of India (RBI) decides the WMA limits after consulting with the central government. This ensures the states have a reasonable borrowing limit.

- Finance Ministry: While involved in financial matters, they don't directly decide WMA limits for states.

- Finance Commission: It recommends financial distribution between the central and state governments but doesn't decide on WMA limits.

- Parliament: Primarily involved in legislative matters and budget approval, but not in setting WMA limits.

Correct Answer: Option 1, RBI in consultation with the Central Government