CHENNAI: Pointing out that the economic impact of the countrywide lockdown would be unprecedented and the responsibility to ensure the welfare of the poor would fall on the State governments, Chief Minister Edappadi K Palaniswami on Saturday urged the Centre to provide a special grant of at least Rs 1 lakh crore to State governments to combat the COVID-19 outbreak and its aftermath.
The CM has requested a grant of Rs 9,000 crore for Tamil Nadu under this dispensation. “Many State Governments, including Tamil Nadu, have announced relief packages, which have been supplemented and supported by the Pradhan Mantri Garib Kalyan Yojana package.
I believe that further relief measures would also be required in the days to come. Substantial expenditure would also be required to ramp up the availability of health infrastructure and medical supplies,” he has said in his letter to Prime Minister Narendra Modi. “The funds can be distributed in proportion of the size of each State’s GSDP to the national GDP, since the expenditure out of this grant will also pump prime the economy and lead to its revival,” Palaniswami underscored.
‘Deficit limits can be eased’
Justifying the request for a special grant, he said measures would have to be taken to revive economic growth, assist various sectors to return to their growth trajectory and to stimulate consumption and investment demand. “All governments will suffer substantial reductions in tax and revenue receipts and it would not be possible to step up revenue raising for a while. However, the expenditure needs will not wait.” In this connection, Palaniswami recalled his earlier request, that the fiscal deficit limits of 3 per cent of GSDP could be relaxed for the financial years 2019-20 and 2020-21, and additional borrowing of 33% above the level permitted for the fiscal year 2019-20, could be be allowed for 2020-21, to enable the states to meet the additional expenditure requirements.
“While this will certainly help the states to immediately incur expenditure, they naturally have a limitation on how much they can borrow in the markets and will be crippled by massive repayment obligations if they borrow too much. But the onus on reviving the economy by fuelling consumption and investment falls on the Governments at this time,” he added. Thanking the PM for the slew of relief measures announced as part of the Pradhan Mantri Garib Kalyan Yojana, the chief minister said, “In these very difficult and challenging times, as a prime minister who has not shied away from taking bold, difficult and unconventional decisions in the interest of the nation, I am confident you would consider this special request and take necessary appropriate action.”