Short of revenue, says Delhi govt; asks Centre for ₹5k cr to pay staff
nNEWDELHI: The Delhi government has sought immediate assistance of Rs 5,000 crore from the Centre to pay salaries to its employees because revenues dried up during the lockdown to curb the spread of the coronavirus disease (Covid-19), deputy chief minister Manish Sisodia said on Sunday.
Sisodia, who also holds the finance portfolio, said he had written to Union finance minister Nirmala Sitharaman for help and added that the Delhi government had not received money sanctioned to states under the Disaster Relief Fund.
According to Sisodia, Delhi’s tax revenue has declined by 78% since the national lockdown came into force on March 25.
“At this juncture, paying salaries to government employees is our biggest concern. They include doctors, healthcare workers, teachers, etc, who have been leading the fight against the virus. We immediately need ₹5,000 crore to pay their salary,” Sisodia said in a video briefing.
He added “Recently, the Union finance ministry announced a relief package (of ₹20 lakh crore) but there is nothing in it for Delhi... Other states have received financial assistance from the Disaster Relief Fund, but the Delhi government has not received any such aid yet... So, I have written to the Union finance minister to grant a one-time relief package of ₹5,000 crore for Delhi.”
The letter, Sisodia’s office said, was sent to the Union minister’s office on May 26.
“Due to the Covid-19 pandemic, there is a valid need for immediate help from the Centre. The one-time grant of ₹5,000 crore will, thereby, help Delhi tide over the immediate crisis. This will also facilitate the Delhi government in releasing the grants to the (three) municipal corporations in the city which largely depend on the city government to pay salary,” said Sisodia.
The Delhi government’s expenditure towards salaries of its employees alone is around Rs 3,500 crore per month, said a senior official in Delhi government’s finance department, requesting anonymity. The official said that for now, the government was primarily spending on two things – salaries and Covid-19 related expenses ranging from healthcare-related spending to arranging food and shelter for the poor.
All government projects that demand capital expenditure have been halted, the official said.
“The Centre should be granting funds to states, especially those with high Covid caseloads,” Jayati Ghosh, a professor of economics at Jawaharlal Nehru University, said. “Most states have been seeking funds since the lockdown was imposed. Most states have recorded around 90% drop in revenue and they are in a helpless state. The need immediate funds to pay salaries, especially those who are leading the fight against Covid – from doctors and nurses to teachers and anganwadi workers.”
In the previous financial year, the Delhi government earned around ₹7,799 crore of revenue in the months of April and May, another senior government official said on condition of anonymity. In the same months this financial year, the Delhi government has only collected ₹1,735 crore, which includes ₹500 crore in Goods and Services Tax (GST).
In April, the government received revenue of around ₹420 crore. May was relatively better in terms of revenue – the collection was recorded at around 1,315 crore – after the city witnessed a phased revival of business and commerce from May 4, and after further lockdown relaxations on May 17.
In May, the major sources of revenue for the government was a “special corona fee” levied at 70% on the maximum retail price (MRP) of alcohol, other than the usual excise element, and revision of value added tax (VAT) to 30% on both petrol and diesel from the earlier rates of 27% and 16.75% respectively, said the official.
“The government has earned more than ₹250 crore through special corona fee alone,” the official said.
The Union finance ministry spokesperson did not respond to an email query specific to Delhi and about the city government’s request for the financial aid.
A finance ministry official, who requested anonymity, said, “The Union government is continuously providing revenues due to the states despite a sharp decline in revenues. Devolution of taxes are happening as per the budget estimate (BE) even though actual revenue shows unprecedented decline from the BE. Last week, the Centre issued sanction orders worth ₹46,038.70 crore for the May instalment of devolution of states’ share in central taxes and duties.”
“Besides, the union government has provided more fiscal space to them as per their demand. On May 17, the Union government acceded to the request of states and increased their borrowing limits from 3% to 5%,{of state gross domestic product} for 2020-21 only in the light of the unprecedented situation due to Covid-19, which will give them extra resources of ₹4.28 lakh crore. States should also mobilise these resources,” the official said.