Nationalist Congress Party (NCP) chief Sharad Pawar has come with suggestions, including a “generous financial package”, as he called for help from the Centre towards Maharashtra, whose economy has taken a severe beating during the coronavirus pandemic.
In his letter to Prime Minister Narendra Modi and Union finance minister Nirmala Sitharaman, the NCP leader pointed out the economic indicators as well as strategy to overcome the state’s financial crisis.
“So far Mumbai is the hardest-hit city in the Covid-19 outbreak and the prolonged lockdown conditions. It has severely impacted the economy of Maharashtra and may have detrimental consequences on Indian economy if not addressed urgently,” Pawar said in his letter.
He said that there is an expected revenue shortfall of Rs 140,000 crore, or around 40%, and said that even if Maharashtra borrowed Rs 92,000 crore, based on the present borrowing limits at 3% of GSDP, it is not going to be enough.
He said out of the borrowings Rs 54,000 crore has been planned for meeting the capital expenditure requirements for this financial year. “So, it is clear that state is going to face a shortfall of Rs 100,000 crore to sustain projected expenditure,” he said.
Pawar also detailed the steps which could be taken to help Maharashtra, which has been the worst-hit state in the country.
One of the steps he suggested was to enhance the borrowing limit under the Fiscal Responsibility and Budget Management Act (FRBM). At the same time, he said, covering the entire shortfall only through borrowing will push the state towards potential debt trap.
“The other strategy could be to cut public spending, however, that would be counterproductive in view of the subdued economy. In fact, there will be additional expenditure requirements in the area of public health and medical education and other public services,” he said.
He put in a request to extend a two-year moratorium on the National Small Savings Fund Loan, saying it will “help in bridging the likely budgetary gap”.
Pawar also requested financial assistance to the Maharashtra government to the tune of 1 lakh crore for FY 2020-21.
“Almost all countries US, Spain, Germany, France, Australia etc have released financial packages of around 10% of GDP. Thus, a room can be created by the Government of India along with RBI for giving suitable financial package to states,” he said.
“In the eventual recovery of the Indian economy the states will play a major role and if left out without any help the states will not be in a position to supplement the required national government efforts,” he said.
