Punjab seeks bailout package for COVID-19 crisis

Chandigarh, April 21 (SocialNews.XYZ) Punjab Chief Minister Amarinder Singh on Tuesday suggested to the Centre a three-pronged strategy to bailout the states from the COVID-19 crisis, including a three-month special financial package.

Citing the collapse in revenues as a result of the lockdown of business and industry, the Chief Minister in a letter to Prime Minister Narendra Modi urged him to ask the Fifteenth Finance Commission to review its interim report for 2020-21 in the context of the much lower revenue share for the states compared with what was expected from the earlier projections which assumed 7 per cent growth of GDP.

Noting that a zero growth scenario in GDP for India was not unlikely, he said some analysts were projecting even negative growth.

Given the likelihood of very low growth, which was expected to cause the revenue shortfall to last for the whole year, Amarinder Singh requested the Prime Minister to direct the Fifteenth Finance Commission to defer the submission of its full report to October 2021, when they will be better able to make a realistic assessment of the likely growth of the economy over the next five years.

"Nothing would be worse than getting committed to a five-year revenue sharing projection based on unrealistically high growth projections," he said, suggesting that the Finance Commission could make another interim report for 2021-22.

Observing that the 40-day national lockdown till May 3 was perhaps necessary to curb the spread of coronavirus, Amarinder Singh said it has resulted in massive economic disruption, which in turn had created very serious fiscal difficulties for all states.

Punjab was facing a huge stress on the state exchequer, he said, adding the near complete shutdown of trade, business and industry had led to a collapse in revenues, and this had happened at a time when essential health and relief expenditures needed to be massively scaled up.

"With the states continuing to shoulder their committed liabilities and facing new demands on relief, health infrastructure expenditure etc, it is only fair and just that the Fifteenth Finance Commission should be requested to recommend a special COVID-19 revenue grant for 2020-21," said Amarinder Singh.

In his letter, the Chief Minister sought an immediate three-month special financial assistance package to enables states to handle the additional health related expenditure and basic relief expenditure, and suggested that the package should give the states maximum flexibility to design, implement and execute it in a manner that is customised to local problems and needs.

The immediate package may be adjusted against the special COVID-19 revenue grant, as proposed, he said.

Source: IANS