PUNJAB CM WRITES TO SHAH FOR INTERIM COMPENSATION OF RS 3000 CR FOR APRIL ON ACCOUNT OF COVID NATIONAL DISASTER

Chandigarh: Pointing to the alarming resource gap between the state’s anticipated receipt and committed expenditure, Punjab Chief Minister Captain Amarinder Singh on Tuesday demanding interim compensation to the tune of Rs 3000 crore for the month of April on account of the COVID-19 national disaster, along with immediate release of Rs 4400 crore of pending GST arrears.
 
In a letter to Union Home Minister Amit Shah, the Chief Minister also asked for expediting the release of the state’s GST arrears of Rs 4400 crore for the last four months, to help the state overcome its resource constraint.
 
Citing the lockdown that had substantial fiscal consequences for all states, Captain Amarinder said the Government of India should compensate Punjab for its loss of revenue due to COVID-19. While the Rs 3000 crore for April was an estimate, he said “detailed assessment of loss and requirement of funds for relief and rehabilitation will be submitted in due course.” However, he stressed, “the Government of India should provide interim assistance so that the fight against COVID-19 is not allowed to weaken in any way.”
 
Punjab, said the Chief Minister, was facing a huge stress on State exchequer on account of the required health and relief measures that are being continuously scaled up, “with hardly any revenue receipts accruing to the state during these days due to near complete shutdown of trade, business and industry.”
 
The state government had made a provision of revenue receipts of Rs. 3360 crore for the month of April 2020 in the State Budget 2020-21. These included: GST- Rs 1322 crore; VAT on Petroleum products - Rs. 465 crore; State Excise Revenue -Rs. 521 crore, Motor Vehicle Tax- Rs. 198 crore; Electricity Duty- Rs. 243 crore, Stamp duty- Rs.219 crore, and Non-tax revenue- Rs.392 crore.
 
However, Captain Amarinder observed that these receipts are expected to decline sharply as most economic activities in the State remain closed on account of the Lockdown. The receipts on account of SGST, IGST, VAT, Excise, Stamp Duty and Motor Vehicle Taxes are almost negligible and the reduced electricity consumption has resulted in a drop of 60% of the expected revenue from electricity duty during April 2020, he noted.
 
In addition, said the Chief Minister, the GST compensation of approximately Rs 4,400 crore for the last four months - from December, 2019 to March, 2020 - was also pending for disbursement by the Union Government.
 
On the other hand, he pointed out, the committed expenditure of the state i.e., Debt servicing, pensions, salaries, relief measures for COVID-19, health care and infrastructure etc., is budgeted at Rs 7,301 crore for the month of April 2020, resulting in the huge resource gap between the anticipated receipts and committed expenditure.
 
Pointing to the critical fiscal situation of the state, the Chief Minister also sought the Centre’s permission to allow sale of liquor, in a phased manner, to mop up VAT and Excise revenue. The Ministry of Home, GoI, should “allow the state to take a conscious decision to allow the sale of liquor in certain areas in a phased manner with strict social distancing and other measures to prevent COVID-19,” he said.
 
 This, said Captain Amarinder, would help the state immensely in its efforts to scale up the relief and health care measures to combat COVID-19 and meet some, if not all, of its committed liabilities and other day-to-day expenses.
 
The Chief Minister requested the Home Minister for early action, while assuring him of the State's full and continued support in the efforts of the Government of India to overcome the present crisis by effectively managing and containing the COVID-19.