June 18, 2024

Justice for Gemmel

Stellar business, nonpareil

States want up to Rs 10-trn package from Centre, deficit financing from RBI

States on Saturday demanded a package of up to Rs 10 trillion from the Centre and dues such as compensation on account of goods and services tax (GST), besides front-loading grants to local bodies. They also wanted the Reserve Bank of India (RBI) to go for deficit financing, which is printing notes, to help these packages.

During the virtual meeting with Prime Minister Narendra Modi, West Bengal Chief Minister Mamata Banerjee asked for a national economic relief package of Rs 10 trillion, which can be disbursed to the states.

Funds from this can be used to fight the pandemic as well as support the states’ economies.

Last month, Union Finance Minister Nirmala Sitharaman had announced a Rs 1.70 trillion central package. However, Banerjee contended it was only 1 per cent of national GDP and the Centre needed to spend more.

“Globally we are seeing Japan, the US, and others are spending much more in proportion to their GDP. India needs to do the same thing,” she said. So far as her state was concerned, Banerjee pressed for a Rs 25,000-crore special package.

She also asked the Centre to clear GST dues of Rs 2,393 crore for the last four months of FY20, apart from pending dues of Rs 36,000 crore and funds of Rs 11,219 crore for the state. “There is no earning but only burning (expenses) now,” she said. Additionally, she sought special relief measures like a loan-repayment moratorium.

Telangana Chief Minister K Chandrasekhara Rao urged the prime minister to announce a big economic package for the states.

For this, he suggested the RBI do deficit financing by way of quantitative easing or printing currency notes to the extent of 5 per cent of GDP.

He asked the Centre to increase the states’ borrowing limit (FRBM) limit to 5 per cent from the present 3 per cent. Citing the revenue loss, the chief minister asked the Union government to facilitate deferring loan instalments of states by at least six weeks.

Rao suggested the Centre take adequate steps to restart the food-processing industry, including mills, so that people did not face shortages of essentials.

Chhattisgarh’s Bhupesh Baghel wanted a boost for micro, small and medium enterprises (MSME). “Due to the long period of lockdown, this important sector, which provides maximum employment, has been endangered,” he said.

He also said given the number of coronavirus-infected people and their status, states should get to decide whether economic activities should be relaxed or not.

Y S Jagan Mohan Reddy of Andhra Pradesh said migrant laborers, daily wage laborers, horticulture and aqua farmers had suffered the most.

He told the prime minister only 7,250 of the 103,986 industrial units in his state were in operation. Reddy wanted the lockdown to be extended to red zones, public transport, schools, malls, theatres, and religious places. He urged the prime minister to announce measures to restart the wheels of the economy while enforcing steps to contain the spread of the pandemic.

Tamil Nadu Chief Minister K Palaniswami asked the Centre to sanction an ad hoc grant of Rs 1,000 crore from the National Disaster Relief Fund (NDRF) to the state for procuring medical items.

He requested a smooth supply of essentials through the railways and inter-state movements of goods. He urged the prime minister to announce a special package for the agricultural sector and asked for additional funding from the Centre and allotment of essential items to support unorganised-sector workers, agricultural labourers, and others. Puducherry Chief Minister V Narayanasamy sought a package of Rs 300 crore.

CMs’ demands

  • Implement ‘Kerala model’, allow movement within districts with no or negligible cases
  • Allow states to take a call on intra-state movement
  • Provide relief package, clear MNREGA dues and other payments
  • Relax fiscal deficit limit from 3% to 4.5-5%
  • Allow 33% more additional borrowing
  • Give bonus to farmers to incentivise staggered/delayed procurement of wheat
  • Waive 3 months’ interest on crop loans and defer recovery by commercial banks
  • Waive interest and penalties on industrial loans for six months to enable industry to meet urgent costs
  • Economic package for MSMEs