Combating Covid-19: Centre releases Rs 17,287 crore to states

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Published: April 4, 2020 8:05 AM

The Centre has released Rs 11,092 crore as the first instalment in FY21 to State Disaster Response Mitigation Fund of 28 states.

Covid-19, Narendra Modi, coronavirus outbreak, coronavirus  fund, COVID19 crisis, Andhra Pradesh, FRBM limitIn the meeting with Modi on Thursday, most states are learnt to have demanded that the FRBM limit be raised for FY21.

A day after many chief ministers flagged lack of resources at their disposal to fight the coronavirus outbreak in a video conference with Prime Minister Narendra Modi, the Centre on Friday released Rs 17,287 crore to states for their disaster mitigation programmes and as revenue deficit grants.

“The finance ministry today released a total of Rs 17,287.08 crore to different states to enhance their financial resources during the COVID19 crisis. This includes Rs 6,195.08 crore on account of ‘revenue deficit grant’ under 15th Finance Commission recommendations to 14 states,” finance minister Nirmala Sitharaman tweeted. The grants pertain to FY21, the year for which the Commission had come out with an interim report.

The Centre has released Rs 11,092 crore as the first instalment in FY21 to State Disaster Response Mitigation Fund of 28 states. The revenue deficit grants are for states such as Andhra Pradesh, West Bengal, Tamil Nadu, Kerala and Punjab for April.

State governments, which are at the frontline of the war against Covid-19 pandemic, had stepped up pressure on the Centre for more generous financial support on a contingent basis. In the meeting with Modi on Thursday, most states are learnt to have demanded that the FRBM limit be raised for FY21, with some states even suggesting that fiscal deficit of up to 5% of the state GDP be tolerated, against the mandated 3% ceiling.

The move comes as most states are acutely cash-starved, with many including Maharashtra, Telangana and Odisha, being forced to defer even salary payments. States’ own tax revenues are seriously undermined due to the economic slump, and the delayed release, if not denial, of funds due to them by the Centre under assorted heads has aggravated the situation.

On top of all these, states are bound to witness an unprecedented decline in tax revenue in April, the crucial month in the fight against the pandemic. As against the protected monthly state GST revenue of Rs 63,700 crore for FY21, April receipts (for March transactions) might turn out to be around Rs 10,000 crore due to the nationwide lockdown, according to per a ballpark estimate. May is unlikely to be any better either.

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