Facing severe financial crunch amidst the corona pandemic, the Punjab Government on Friday received a grant of Rs 638.25 crore from the Centre as post-devolution Revenue Deficit Grant.
This is the first grant received by the cash-strapped State from the Centre during the current fiscal.
As per the information, a total of Rs 6,195.08 crore has been released by the Centre as grants-in-aid “to cover the deficit on post-devolution revenue account in 2020-21 as recommended by the 15th Finance Commission on monthly proportionate basis to 14 states, including Punjab.
Announcing the decision on Twitter, the Union Finance Minister Nirmala Sitharaman said that the amount “would provide them additional resources during the Corona crisis”.
Notably, the Union Finance Ministry on Wednesday had announced release of third monthly installment of Rs 6,195 crore to 14 states to provide additional resources during COVID-19 crisis.
Earlier, the Ministry had released similar amount on April 3 and May 11 as the first and second installments of the post devolution revenue deficit grant to 14 states including Punjab.
Struggling on the fiscal front, the state is expecting a revenue shortfall of 25 per cent of Total Revenue Receipts (BE) as per initial assessment, which could lead to an even higher shortfall of about Rs 26,400 crore, that is about 30 percent of the state’s Total Revenue Receipts (BE) in 2020-21.
The state Finance Minister Manpreet Badal had pointed that the State’s effort to break the transmission through imposition of lockdown or curfew has led to a significant loss of Revenue and Gross State Domestic Product (GSDP).
“Due to lockdown, the State has witnessed a shortfall of 80 percent in the State’s Tax Revenue collections in April 2020 against the budgetary targets. This is a decrease of 77 percent compared to the previous year (2019-20). Further, if we see the financial position for first quarter (2020-21), the State’s Revenue has registered a shortfall of Rs 5576 crore, 54 percent, as against budgetary targets. Further, the revenue collections have decreased by 42 percent compared to the previous year’s corresponding period,” Manpreet had stated.
The Minister has pointed that even though the economic activity has picked up in July, the financial position is still gruesome as the State’s revenue collections have registered a shortfall of Rs 6935 crore in the first four months (that is April to July 2020) against the budgetary targets.
Punjab has all along been demanding financial help from the Centre, besides releasing its share of the GST, to combat the prevailing COVID-19 crisis in the state.