Reviewing the state’s fiscal situation amid Covid-19 lockdown, Punjab Chief Minister Capt Amarinder Singh on Monday directed all the state Government departments to further rationalize their expenses in order to ensure no shortage of funds for fighting the pandemic at all costs.
Capt Amarinder, expressing grave apprehensions of prolonged impact of Covid-19, pointed that the State was expecting a shortfall of nearly 30 percent in the Total Revenue Receipts (TRR) in financial year of 2020-21 on account of coronavirus and lockdown effect.
At the same time, he made it clear that capital expenditure in essential sectors such as health, education, and infrastructure would be retained at `5,000 crore, notwithstanding the economic crisis facing the State.
With studies and reports from around the world presenting a grim picture on the Covid outlook, the projections were not good, the Chief Minister said at a video conference meeting of the Empowered Committee of Cabinet on Fiscal Management.
Reviewing the state’s economic situation amid the unprecedented crisis, the Chief Minister said that the focus of the Government was on ensuring that salaries and pensions continue to be paid on time, along with power subsidy to the PSPCL.
“No compromise could be made to ensure funding for all frontline departments, such as health, police, and the local bodies, which are working 24X7 in battling the disaster,” he added.
In spite of its strained finances, the State has successfully paid all grants to Local Bodies and Panchayati Raj Institutions (PRIs), ensuring that they do not face problems in disbursement of salaries, the Chief Minister noted.
Further, he said, up to date releases have been made for medical bills, POL (Petrol, Oil, Lubricants) bills and all other SOE (Standard Object of Expenditure) expenditure, as well for the successful roll-over to the new Integrated Financial Management System (IFMS).
To help the state tide over the critical economic situation, Capt Amarinder underlined the need for fast-paced industrial revival and called for greater thrust on the development of the industrial parks at Rajpura, Bathinda, Mattewara (Ludhiana), and Wazeerabad Fatehgarh.
The focus should be on attracting more investments, particularly from industries and businesses seeking to shift out of China in the wake of the pandemic.
DETERIORATING FISCAL SITUATION
The meeting took stock of the state’s deteriorating fiscal situation, which showed drastic decline in receipts since the beginning of this financial year. For April 2020, the decline in Total Revenue Receipts (TRR) against the budget estimates was 12 percent, which went up to a whopping 37 percent in May, aggregating to a total of 25 percent of the budget estimates for these two months.
The total expenditure budgeted for 2020-21 was `1,08,644 crore — including revenue expenditure of Rs 95,716 crore and principal repayment of `12,928 crore.
The state’s own receipts came down to a mere `396 crore in April 2020 amid the total lockdown, with total receipts for the month standing at `6,797 crore, followed by `3,891 crore in May (state’s own receipts at `1,252 crore). In fact, total receipts (inclusive of `4,200 crore of marketing borrowings) have been an abysmal `5,882 crore from April to June 5, 2020.
“The situation is unlikely to improve in the immediate future,” the Chief Minister warned, citing the continuously declining collections of the State, as well as the worsening Covid situation in the country.
‘POWER SUBSIDY TO FARMERS TO CONTINUE’: CAPT
Notwithstanding the revenue shortfall and urgent need for the State to borrow to meet its expenses, the Chief Minister Capt Amarinder reiterated that power subsidy to the farmers would continue and there was no question of the State Government accepting the condition to replace it with direct cash transfer for availing the additional borrowing limit allowed by the Centre.
“This so-called power reform is violative of the country’s federal structure,” he said, adding that he would write to the Prime Minister on this issue as the Central Government could not put conditions on states for availing loans.
Pointing out that this, and the recent Ordinance on agricultural reforms, could further pave the way for elimination of the MSP regime, Capt Amarinder said that he would convey Punjab’s opposition to the Centre very strongly.
Notably, as per the Finance Department’s estimates, assuming zero nominal growth of GSDP this year from the GSDP (Revised Estimates) of `5,74,760 crore during 2019-20 and the past trends of average Total Revenue Receipts (TRR)/GSDP growth, Punjab can expect TRR of around `62,246 crore during 2020-21, that is a shortfall of around `25,758 crore or a 29.26 percent dip in TRR.