Punjab CM reviews fiscal situation amid covid lockdown

Chandigarh: Expressing grave apprehensions of prolonged impact of Covid-19, Punjab Chief Minister Captain Amarinder Singh on Monday directed all departments to  further rationalise their expenses in order to ensure no shortage of funds for fighting the pandemic at all costs.
 
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.
 
The Chief Minister made it clear that capital expenditure in essential sectors such as health education and infrastructure would be retained at Rs 5000 crore, notwithstanding the economic crisis facing the state, which was expecting a shortfall of nearly 30% in the Total Revenue Receipts (TRR) in FY 2020-21 on account of the Covid and lockdown effect.
 
Reviewing the economic situation of the state amid the unprecedented crisis, the Chief Minister said the focus of his 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 were 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 PRIs, ensuring 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 bills and all other SOE expenditure, as well for the successful roll-over to the new IFMS.
 
To help the state tide over the critical economic situation, Captain 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.
 
As per the Finance Department’s estimates, assuming zero nominal growth of GSDP this year from the GSDP (RE) of   Rs. 5,74,760 crore during FY 2019-20 and the past trends of average TRR/GSDP growth, Punjab can expect TRR of around Rs. 62,246 crore during FY 2020-21, i.e. a shortfall of around Rs. 25,758 crore or a 29.26 % dip in TRR. 
 
Notwithstanding this shortfall and the urgent need for the state to borrow to meet its expenses, the Chief Minister 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 was 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, Captain Amarinder said he would convey Punjab’s opposition to the Centre very strongly.
 
Earlier, 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 TRR against the budget estimates was 12%, which went up to a whopping 37% in May, aggregating to a total of 25% of the budget estimates for these two months. The total expenditure budgeted for FY 2020-21 was Rs. 108644 crore – including revenue expenditure of Rs 95716 crore and principal repayment of Rs. 12928 crore.
 
The state’s own receipts came down to a mere Rs 396 crore in April 2020 amid the total lockdown, with total receipts for the month standing at Rs 6797 crore, followed by Rs 3891 crore in May (state’s own receipts at Rs 1252 crore). In fact, total receipts (inclusive of the Rs 4200 crore of marketing borrowings) have been an abysmal Rs 15882 crore from April to June 5, 2020. 
 
The situation was 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.
 
The meeting was attended by Local Bodies Minister, Brahm Mohindra, Finance Minister, Manpreet Badal, CPSCM, Suresh Kumar, Chief Secretary, Karan Avtar, ACS Finance, Anirudh Tiwari, Financial Advisor to CM, VK Garg and other officials of the Finance Department.