Five states seek ~2.25L-crore from Centre to tide over financial distress

Chief ministers express inability to pay salaries, suggest creation of national Covid-19 fund

NEW DELHI: Five opposition-ruled states have sought close to ₹2.25 lakh crore from the Centre to overcome stress on state finances due to the lockdown, which some chief ministers want to extend beyond May 3 in close to 330 Covid-19 affected districts.

Maharashtra has sought ₹50,000 crore; Chhattisgarh, ₹30,000 crore; Kerala, ₹80,000 crore; Rajasthan, ₹40,000 crore and West Bengal ₹25,000 crore – as immediate compensation to the revenue loss. Tamil Nadu, governed by BJP-ally the AIADMK, has sought ₹9,000 crore.

This is in addition to demands from states that the Centre pay the pending GST compensation immediately, increase the borrowing limit from 3% of the state GDP to 5%, suspend repayment of all state development loans for three months, and allow flexifunds under Centrally sponsored schemes. Many states have said that they will not be able to pay salaries of employees for April, if the Centre fails to provide financial aid.

NEW DELHI: Five opposition ruled states have sought close to ~2.25 lakh crore from the Centre to overcome stress on state finances due to the national lockdown, which some chief ministers want to extend beyond May 3 in close to 330 Covid-19 affected districts.

Maharashtra has sought ~50,000 crore; Chhattisgarh, ~30,000 crore; Kerala, ~80,000 crore; Rajasthan, ~40,000 crore and West Bengal ~25,000 crore -as immediate compensation to the revenue loss suffered because of the national lockdown. Tamil Nadu, governed by BJP-ally the All India Anna Dravida Munnetra Kazhagam, has sought ~9,000 crore.

This is in addition to demands from states that the Centre pay the pending GST compensation immediately, increase the borrowing limit from 3% of the state GDP to 5%, suspend repayment of all state development loans for a period of three months, and allow flexi-funds under Centrally sponsored schemes for Covid-19 management. The states also want a further increase (it has already been increased twice, by a total of 60%) in their Ways and Means limit, which helps them borrow more.

Many states, such as Punjab, Kerala and Maharashtra, have said that they will not be able to pay salaries of employees for the month of April, if the Centre fails to provide financial assistance. The Centre has given financial help to states through release of first instalment of money for the Centrally funded schemes, its share to states of the Central taxes, money for disaster relief and some part of the pending GST compensation.

On Monday, Jharkhand chief minister Hemant Soren threatened to take the Centre to the court, if it failed to compensate the state for its huge revenue loss. “We have no money. We need the Centre’s help. If that does not come, we will have to look for legal options,” Soren told reporters.

Kerala chief secretary Tom Jose sought an exclusive Covid-19 financial package of ~80,000 crore from the Centre for the losses suffered during the lockdown in a letter to home ministry. “Our cumulative loss is over ~80,000 crore. Micro and small and medium enterprises alone lost over ~14,000. Hotel, tourism, fisheries, IT, self-employment and other sectors also lost badly. So we want an exclusive package to revive these sectors,” said Kerala chief minister Pinarayi Vijayan.

Maharashtra government officials said the state has demanded financial assistance of ~50,000 crore to be released over next five months in the context of the drop in the state revenue due to the lockdown. A finance department official said chief minister Uddhav Thackeray has already sought financial aid from the Centre.

Chhattisgarh chief minister Bhupesh Baghel has written to home minister asking for ~30,000 in the next three years as compensation for revenue loss. Apart from seeking ~40,000 crore immediate relief, Rajasthan chief minister Ashok Gehlot has also suggested a Rs one lakh crore national Covid-19 management fund.

“From this fund, the states can get money as and when needed,” Gehlot said. West Bengal chief minister, Mamata Banerjee, backed the demand for the creation of a national Covid-19 fund and said ~10,000 be transferred to the bank account of every worker from the unorganised sector and MSMEs, farmers, and tea garden employees and that the 100-day rural job guarantee scheme be extended to 150 days. She has already sought ~25,000 crore from the Centre.

In a letter to the home ministry, the Tamil Nadu government has sought to increase the fiscal deficit limits from 3% of state GDP to 4.5% and allowing borrowing of 33% more for the current financial year. This is other than ~9,000 crore compensation sought, officials said.

“The GST compensation for December-January should be released now and 50% of the 2020-21 Finance Commission grants to the urban and rural local bodies should be given immediately,” the letter said. The state has sought an ad-hoc grant of ~1,000 crore from the National Disaster Relief Fund to procure medical and protective equipment. It has also asked for special financial aid for medium and small scale units, which have suffered the most during the lockdown period. “Payment of GST Advance Tax and IT may be deferred for six months to help the MSMEs,” the letter said.

Punjab chief minister Amarinder Singh has demanded the immediate release of Punjab’s GST arrears of ~4,386.37 crore. He also asked for a bonus to farmers for staggered purchase of wheat, as well as direct cash assistance to daily wage industrial and agricultural labourers.

“A revenue grant for the next three months, with flexibility to spend as per local conditions, would help tide over the acute fiscal crisis faced due to revenue shortfall,” he wrote to the home ministry, repeating his suggestion that the 15th finance commission recommendation should come into force from the next financial year instead of April 1 this year. He has suggested that the commission re-evaluate its GDP estimate of 7% on the basis of which it submitted its recommendations.

Singh demanded allowing the use of 25% flexi funds under CSSs for Covid-19 and to enhance it to 50%. States are allowed to customise central schemes to local needs and spend up to 25% of the total allocation for such schemes for this. He also demanded allowing contributions to CM relief fund as a fit charge under CSR on the lines of PM Relief Fund and the PM Cares fund.

› Our cumulative loss is over ~80,000 crore. MSMEs alone lost over ~14,000. Hotel, tourism, fisheries, IT, and other sectors also lost badly. We want an exclusive package PINARAYI VIJAYAN, Kerala CM

› A revenue grant for next three months, with flexibility to spend as per local conditions, would help tide over the acute fiscal crisis faced due to revenue shortfall AMARINDER SINGH, Punjab CM