Finance Ministers of non-BJP-ruled States and an array of political leaders have demanded the Centre to avail itself of loans from the Reserve Bank of India (RBI) to ease the fiscal strain induced by COVID-19 on State governments and warned against tax rate hike to garner resources.
Participating in a two-day webinar on “COVID-19 pandemic and fiscal federalism in India” organised by the Gulati Institute for Finance and Taxation Studies here, they suspected a bid to precipitate the crisis and set the ground for imposing a financial emergency in the country. States were scraping the bottom of the barrel for disbursing salary and pensions and need a fiscal support, they felt.
Inadequate steps
Congress leader Jairam Ramesh while participating in the discussions said the country now had the milieu of a fiscal emergency. The steps taken by the Centre to tackle the pandemic spread were too inadequate and it would only deepen the crisis.
COVID-19 would alter the fiscal and political architecture of the country, he said.
Communist Party of India (Marxist) general secretary Sitaram Yechuri said that the steps adopted by the Centre were too inadequate to meet the crisis. A large chunk of the migrant workers were wallowing in hunger and distress.
The onus for taking care of them had been pushed on to the State governments. As many as 14 crore people had been rendered jobless. The Centre should extend liberal financial assistance to the States, release the pending grain stock and provide assistance to the jobless, he said.
Common policy
CPI general secretary D. Raja called for taking forward the discussions for ironing out a common Opposition policy to manage the crisis.
Delhi Finance Minister Manish Sisodia and Kerala Finance Minister T.M. Thomas Isaac supported Punjab Finance Minister Manpreet Singh Badal’s demand for raising the annual borrowing limit from 3% to 5%, immediate release of GST compensation and additional grant for COVID-19 management.
Mr. Singh said that no mask or vaccine was available to contain the crisis and the Centre should step in to bail out the States.
Dr. Isaac also explained how GST had undermined the fiscal space of States and reminded that the late Union Finance Minister Arun Jaitley had assured to borrow money to pay the compensation to States, if need arose.
