New Delhi: Chhattisgarh Chief Minister Bhupesh Baghel in a letter to Prime Minister Narendra Modi on Friday sought relaxation in the state’s borrowing limit to six per cent of the Gross State Domestic Product (GSDP) this year in view of the situation arising out of the COVID-19 pandemic.
Baghel also requested that the fiscal deficit of the state be made equal to five per cent of the GSDP as an exception.
These, he said, will help achieve the objective of raising more economic resources for development activities in the state and providing relief to the needy.
The chief minister in the letter also drew Prime Minister Modi’s attention towards the financial difficulties being faced by Chhattisgarh due to the COVID-19-induced lockdown.
Baghel said that all economic activities in the state are stopped since March 22 to prevent the spread of the novel coronavirus.
He said the lockdown has not only led to revenue loss for the state, but also badly affected the economically weaker section of society, including daily wagers, labourers, small shopkeepers and rural households.
Since it is the harvesting season, farmers are also facing difficulty in harvesting and selling crops, the chief minister said.
He said extraordinary measures are required at the time of crisis, so the state should be given approval to relax the borrowing limit to six per cent of the GSDP this year. The financial deficit of the state should also be approved to be kept equal to five per cent of the GSDP as an exception this year, Baghel said.
The chief minister informed that the budget allocation for the 2020-21 fiscal has already been released to all the departments of the state and there is a need for financial resources for expenditure for basic needs.
He said that the Union Finance Ministry’s consent to the state for borrowing Rs 5,375 crore from the market, which is equal to 50 per cent of the state’s net lending limit for the first nine months of this financial year, is insufficient to meet the expenditure in this period.
Baghel said as the state’s revenue receipts are expected to fall this year, relaxation is necessary in the state’s net borrowing limit and the fiscal deficit limit (three per cent of the GSDP) as determined by provisions of the Fiscal Responsibility and Budget Management Act.
He said Chhattisgarh has been a state that has ensured strict adherence to financial discipline since its formation. Currently, it has the lowest debt burden (19.2 per cent of GSDP) and lowest interest payments (7.4 per cent of total revenue receipts).
The chief minister expressed hope that in these difficult times, the Centre will consider his legitimate demands.