New Delhi: Nationalist Congress Party chief Sharad Pawar has five suggestions for the Narendra Modi government to help states tackle the effects of the Covid-19 pandemic on economy. This comes as India battles the coronavirus, with Maharashtra, where NCP is in power, reporting the highest number of cases — more than 2,400 infected and close to 200 dead.
Taking to Twitter Wednesday evening, Pawar detailed the five steps.
The first step he suggested was the extension of RBI’s new loan deferment policy to state debt too. The NCP leader said, “RBI has implemented new deferment policy regarding the loan repayment in the background of Covid-19 lockdown. This should be made applicable to State Debt as well. The central government should defer payment of instalments to RBI on State Debt at least for six months.”
In the backdrop of #Covid_19 #pandemic it is difficult for the states to maintain the economic balance. Here are a few suggestions that could be considered by the Central Government.
— Sharad Pawar (@PawarSpeaks) April 15, 2020
As part of its Covid-19 Regulatory Package, the Reserve Bank of India gave a three-month moratorium on repayment of loans last month.
Maharashtra’s total debt is estimated to be around Rs 5 lakh crore.
Pawar’s second suggestion included nationalised banks extending interest-free advances to state governments to tackle the coronavirus pandemic.
“Most of the Nationalised Banks have flushed off more than 10 Lakh Crore of funds to corporates in the last five years. In the situation of Covid-19 Pandemic these Nationalised Banks should extend interest free advances to the State Government,” he said.
The Reserve Bank of India has facilitated banks to get adequate funds at low rates to encourage them to lend to productive sectors of the economy. Through long-term repo operations, banks can borrow from the RBI for a tenor of 1-3 years at the prevailing repo rate of 4.4 per cent.
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Change in CSR provisions
Pawar also said the Chief Minister’s Relief Fund should be brought under the Corporate Social Responsibility mandate for companies. With this move, he said, “All State Disaster Management Authorities will be empowered to deal with Covid related crisis in various quarters if it is done so.”
The Union Ministry of Corporate Affairs had clarified last week that while contributions to the PM Cares Fund will be eligible as CSR expenditure, contributions to the CM relief fund won’t be allowed a similar leeway.
The first to protest against the move was Kerala. Chief Minister Pinarayi Vijayan wrote to PM Modi asking for doing away with the unequal treatment and allowing contributions even under the CM Relief Fund and state relief funds to be eligible as CSR.
Relaxation of fiscal deficit limit
Asking for a relaxation of fiscal deficit limit to deal with the additional expenditure and revenue fall due to the lockdown and Covid-19 pandemic, the NCP leader said states were asking for a 4 per cent allowance as opposed to the three per cent fiscal deficit limit mandated by the Fiscal Responsibility and Budget Management Act.
Faced with a cash crunch in the wake of rising expenditure and falling revenues, many states, including Bihar, Tamil Nadu and Kerala, have sought similar increase in the limit to give space for states to borrow more in 2020-21.
Redirection of FCI produce
As part of his suggestions Pawar also mentioned the 1.3 lakh tonnes of wheat purchased by Food Corporation of India last year which was not lifted from the godowns in Punjab. He said the Government of India should channelise the yield to the poor, needy and migrant labourers in the states.
After the lockdown was extended by Prime Minister Modi Tuesday, thousands of migrants gathered outside the Bandra railway station in Mumbai as they wanted to go home.
Also read: Districts in Delhi, Mumbai, Pune in Red Zone as Modi govt divides country to fight Covid
Sharad Pawar has so much black money that if he wishes the GDP will go to 12 percent