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As lockdown dries up revenue and pandemic ups expenses, Bengal govt looks at ways to meet shortfall

Though Chief Minister Mamata Banerjee had welcomed the decision of the Centre to extend the three-week nationwide lockdown till April 30 on Saturday, saying that the Centre and State were on the same page, the extension of the lockdown will come at a great cost for the state’s finances, according to the officials.

west bengal coronavirus, bengal lockdown, india lockdown, coronavirus, bengal lockdown impact, mamata banerjee, kolkata city news Trucks stranded at Petrapole in North 24 Parganas on Sunday. (Express photo/Partha Paul)

The West Bengal government is losing Rs 55 crore revenue daily on account of the lockdown in the wake of the coronavirus pandemic, and will lose Rs 1,700 crore till April 30, the new extended day of the lockdown, according to senior officials of the state Finance Department. Adding to the decreasing revenue, the government’s expenditure is also on the upswing, thereby putting pressure on the state’s already weak finances, they said.

“Our main headache is that the income or revenue is decreasing and our expenditure is mounting with every passing day. The government will have to give subsidy or compensation to many sectors, but at the same time our income side is abruptly falling due to the lockdown,” a senior official of the Finance Department said on condition of anonymity.

Though Chief Minister Mamata Banerjee had welcomed the decision of the Centre to extend the three-week nationwide lockdown till April 30 on Saturday, saying that the Centre and State were on the same page, the extension of the lockdown will come at a great cost for the state’s finances, according to the officials.

“We used to earn 90 per cent of our revenue from four major sectors — excise, lottery, stamp duty and transport. Now, due to the lockdown, we are getting zero revenue from these four sectors. We don’t know how many days this lockdown will continue and when the situation will turn normal. Even if it happens early, the lost revenue will not be compensated. So, we will lose the entire revenue,” a senior official of the state Finance Department told The Indian Express.

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According to sources, the monthly revenue earned by the State Excise Department before the lockdown was Rs 1,000 crore, followed by stamp duty at Rs 450 crore, with lottery and transport sector contributing Rs 25 crore and Rs 210 crore respectively — a total of Rs 1,685 crore — to the state exchequer.

To minimise this shortfall, Chief Minister Mamata Banerjee and state Finance Minister Amit Mitra have time and again written to Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman, asking them to sanction Rs 25,000 crore to West Bengal and immediately release the funds still due to the state.

Six days ago, Mitra in a letter to Sitharaman asked for the release of the entire sum of revenue deficit grant — Rs 5,013 crore — provided by the 15th Finance Commission to West Bengal. Mitra asked the money to be paid in three equal monthly installments of Rs 1,671 crore for April, May and June.

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The West Bengal government has also sought relaxation in their fiscal deficit, asking the Central Government to increase the FRBM (Fiscal Responsibility and Budget Management) limit from 3 per cent to 5 per cent of the State Gross Domestic Product — a demand raised by several other states, including Telangana and Bihar.

Increasing the fiscal deficit limit would help the state government borrow money from the market to meet the cost of additional spending and a sudden fall in revenue.

CPM leader and former finance minister, Asim Dasgupta, concurred with the state’s demand to increase the FRBM limit. “In this situation, the state government has to increase the income of common people. To do that, the Central government has to increase the FRBM limit and they should pay the GST and Finance Commission’s outstanding to the states… The Central Government has given a huge rebate to the corporate sector. It should immediately withdraw that rebate,” Dasgupta told The Indian Express.

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According to former chief secretary Ardhendu Sen, the government has to concentrate on how to increase income amid the lockdown. “The government can allow home delivery of liquor. If new coronavirus cases dip, then the government may ease the lockdown for two days in a week and allow limited production in the manufacturing sector,” Sen added.

Meanwhile, the TMC government has already announced austerity measures to cut the non-essential expenditure. “The state government is currently required to incur heavy unforeseen expenditure to combat the situation arisen due to the pandemic. The lockdown, which is currently in force throughout India, has severely affected the economy of the country and the state,” read a Finance Department order on April 2.

A source in the Department said that the austerity drive would be applicable for the first quarter of the 2020-21 financial year and would be reviewed after two months.

“Our state is not facing a significant financial crisis at this moment. The timing is an advantage to the government as the financial year has just begun. The government can stop functioning of certain departments and use their budget for the welfare sector because to boost the economy now, people, especially the poor, should have sufficient money in their hand,” said former Chief Secretary Basudeb Banerjee.

First published on: 13-04-2020 at 03:04:33 pm
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