NCP chief Sharad Pawar on Sunday wrote letter to Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman drawing their attention to economic indicators and strategy to overcome the crisis faced by the State.
Sharad Pawar in the letter suggested that Centre should extend National Small Savings Fund Loan (NSSF) repayment by two years. He suggested that additional grants of Rs 1 lakh crore to given to Maharashtra for the FY 2020-21.
Taking to Twitter, Sharad Pawar wrote: "Conveyed my concern to Hon. @PMOIndia and @nsitharamanoffc and drew their attention towards the following economic indicators and strategy to overcome the crisis faced by the State."
"It is learnt that, the revenue receipts projected in the Maharashtra Budget of 2020-21 are about 3,47,000 crores. And Economic activity is not likely to pick up much in the short term and may improve slightly in the medium term. Accordingly, as per the revised estimates the expected revenue shortfall would be 1,40,000 crores. This is around 40% of the expected revenues and will leave a huge hole in the state finances.," Pawar said in the letter.
He further said that as per the present borrowing limits (3% of GSDP), the state can borrow up to 92,000 crores, out of which 54,000 crores has been planned for meeting the capital expenditure requirements for the financial year 20-21. So, it is clear that sate is going to face a shortfall of 1,00,000 crores to sustain projected expenditure.
Pawar also listed some strategies in the letter. One strategy is to enhance the FRBM borrowing limit and borrow more. However, covering the entire shortfall only through borrowing, will push the state towards a potential debt trap. The other strategy could be to cut public spending, however that would be counterproductive in view of subdued economy. In fact there will be additional expenditure requirements in the area of public health and medical education and other public services, Pawar wrote in the letter.
In the letter, NCP chief also said that Maharashtra requests additional grants of untied nature to the tune of 1 Lakh Crores for the FY 2020-21. "It is imperative that in these testing times the Government of India should offer suitable financial assistance to states also. The Government of Maharashtra requests additional grants of untied nature to the tune of 1 Lakh Crores for the FY 2020-21," Pawar wrote.
He also gave examples of US, Spain, Germany, France, Australia who have released financial packages of around 10 % of GDP. "Almost all countries US, Spain, Germany, France, Australia etc. have released financial packages of around 10 % of GDP. Thus, room can be created by Government of India along with RBI for giving suitable financial package to states," Pawar wrote.
He also wrote a second letter in which he said that coronavirus has hit urban areas the hardest and has battered urban economy. Aviation, transport, tourism, hospitality, brick and mortar retail, entertainment, media and the wellness industry have been hit very hard and may not ever regain their financial health.
Pawar suggested that Government should actively promote and encourage business via E-commerce and home-delivery. He also suggested that Regulatory frameworks and credit systems should be speedily put in place for this new breed of enterprises and entrepreneurs. Early preemptive action with respect to these emerging businesses can make India a formidable player in the new post Covid economy.
Pawar said that manufacturing India should move fast and take steps to capture the space likely to be released by China. "I suggest a proactive engagement with G-20 and BRICS in this regard along with a suitable policy framework to encourage these nations to shift manufacturing bases to India," NCP chief said.