Coronavirus | Sharad Pawar seeks financial package for Maharashtra

‘It faces a shortfall of ₹1 lakh crore to sustain expenditure’

Nationalist Congress Party leader Sharad Pawar on Sunday wrote to Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman, saying Maharashtra would face a shortfall of ₹1,00,000 crore to sustain projected expenditure during the fiscal 2020-21 because of the lockdown. He demanded additional grants to close the gap.

“Revenue receipts projected in Maharashtra’s budget for 2020-21 are about ₹3,47,000 crore, and economic activity is not likely to pick up much in the short term and may improve slightly in the medium term. Accordingly, as per the revised estimates, the expected revenue shortfall would be ₹1,40,000 crore. This is around 40% of the expected revenues and will leave a huge hole in the State’s finances,” he said.

Mr. Pawar said that as per the present borrowing limits (3% of the GSDP), the State could borrow up to ₹92,000 crore, of which ₹54,000 crore was planned for meeting the capital expenditure requirements. “So, it is clear the State is going to face a shortfall of ₹1,00,000 crore to sustain the projected expenditure,” he said. Covering the entire shortfall only with borrowings would push the State to a debt trap.

“The other strategy could be to cut public spending. But that would be counterproductive in view of the subdued economy. The State makes a repayment of ₹10,500 crore every year on account of the NSSF loan given by the Government of India. It is requested to extend a two-year moratorium on the repayment. Further, it is imperative that in these testing times, the Government of India should offer suitable financial assistance to the States. The Government of Maharashtra requests additional grants of untied nature to the tune of ₹1 lakh crore for FY 2020-21,” he said.

He pointed out that the U.S., Spain, Germany, France and Australia had released financial packages of 10% of the GDP and said the Centre and the RBI could create room for a suitable financial package to the States.

He said aviation, transport, tourism, hospitality, brick and mortar retail, entertainment and media had been hit hard by the COVID-19 pandemic. “They would have to be re-skilled for alternate employment, and alternate businesses will have to be actively promoted,” he said, with a thrust on Internet-based business culture.

Mr. Pawar said India should capture the space likely to be released by China in manufacturing. “All the nations have realised the need for a more diverse supply chain in order to have reliability in supplies,” he said, suggesting a proactive engagement with the G-20 and BRICS nations and a policy to encourage these nations to shift manufacturing to India.