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Covid-19 economic crisis: Bihar requests Centre for early release of local body funds

Bihar has also requested the Centre for raising the state’s borrowing limit under the Fiscal Responsibility and Budget Management Act to tide over the financial crisis.

Written by Santosh Singh | Patna |
Updated: May 13, 2020 10:01:00 am
Bihar economic crisis, Bihar covid situation, Bihar CM Nitish Kumar, Bihar asks centre for funds, Bihar migrants, Bihar coronavirus cases, Bihar news, Indian express Bihar Chief Minister Nitish Kumar. (File photo)

To generate employment in the wake of the Covid-19 outbreak and the lockdown, the Bihar government has requested the Centre for the early release of quarterly funds allocated for Panchayati Raj institutions and local bodies.

The 15th Finance Commission recommended allocation of Rs 7,436 crore for Panchayati Raj and local body schemes in Bihar for 2020-21 fiscal.

The state government has also requested the Centre for raising the state’s borrowing limit under the Fiscal Responsibility and Budget Management Act to tide over the financial crisis.

In a letter to Union Finance Minister Nirmala Sitharaman on May 8, Deputy Chief Minister and state Finance Minister Sushil Kumar Modi said, “… In the situation of lockdown arising out of COVID-19, there is an active role of all local bodies in mitigating the adverse effect of lockdown. This is because a large part of the money that is devolved to the local bodies leads to the generation of employment. In view of this, it is requested that the first installment of the local bodies grant may be released in the first quarter itself of the current year.”

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Later, Modi told The Indian Express that the early release of central funds would boost employment opportunities for local residents as well as the migrants returning homes.

He said April saw a dip of 82.29 per cent in state revenue and GST and commercial taxes registered an 84 per cent shortfall.

He said the fall in revenue collection for the first quarter came even as the state government had to spend heavily in its fight against Covid-19.

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“Taking loans is the only option to deal with the crisis. I have requested Union Finance Minister Nirmala Sitharaman to increase FRBM limit from 3 per cent to 4 per cent,” he said.

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Requesting the Union Finance Minister to let the state use from the Consolidated Sinking Fund (CSF) created in 2008, Modi wrote, “…Since then (2008), the State Government has been contributing 0.5 per cent of the state’s total public debt and other liabilities of the previous years to this fund. State Government has contributed Rs 7,683 crore in the CSF till date… In view of the stressed position of state resources due to the COVID-19 pandemic, the State Government would desire that it utilises this resource for meeting demands related to outstanding liabilities… the State Government would request that the existing provisions of CSF scheme are relaxed and State Government is allowed to utilize the State’s principal contribution to CSF for meeting its outstanding liabilities.”

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