Punjab Seeks Rs 3,000 Crore Interim Compensation from Centre Citing ‘Resource Gap’

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The Punjab government on Tuesday sought from the Centre an interim compensation of Rs 3,000 crore for the month of April in view of “alarming resource gap” and also demanded permission for sale of liquor to mobilise excise revenue.

Pointing to the alarming resource gap between the state’s anticipated receipts and committed expenditure, Chief Minister Amarinder Singh on Tuesday demanded interim compensation to the tune of Rs 3,000 crore for the month of April on account of the COVID-19 national disaster, said a government statement here.

In a letter to Union Home Minister Amit Shah, the chief minister also asked for expediting the release of the state’s GST arrears of Rs 4,400 crore for the last four months, to help overcome resource constraint.

Stating that the lockdown had substantial fiscal consequences for all states, Singh said the central government should compensate Punjab for its loss of revenue due to COVID-19.

While the Rs 3,000 crore for April was an estimate, he said “detailed assessment of loss and requirement of funds for relief and rehabilitation will be submitted in due course,”.

However, he stressed that the Centre should provide interim assistance so that the fight against COVID-19 is not allowed to weaken in any way.

Punjab was facing a huge stress on account of the required health and relief measures that are being continuously scaled up, “with hardly any revenue receipts accruing to the state during these days due to near complete shutdown of trade, business and industry”, the chief minister said.

The state government had made a provision of revenue receipts of Rs 3,360 crore for the month of April 2020 in the state budget 2020-21.

It comprised Rs 1,322 crore of GST, Rs 465 crore of VAT on petroleum, Rs 521 crore state excise revenue, Rs 198 crore of Motor Vehicle Tax, Rs 243 crore of electricity duty, Rs 219 crore of stamp duty and non-tax revenue of Rs 392 crore.

The chief minister observed that these receipts are expected to decline sharply as most economic activities in the state remain closed on account of the lockdown.

The receipts on account of state GST, integrated GST, VAT, excise, stamp duty and motor vehicle taxes are almost negligible and the reduced electricity consumption has resulted in a drop of 60 per cent of the expected revenue from electricity duty during April 2020, he said.

On the other hand, he pointed out, the committed expenditure of the state which is debt servicing, pensions, salaries, relief measures for COVID-19, health care and infrastructure etc., is budgeted at Rs 7,301 crore for the month of April 2020, resulting in the huge resource gap between the anticipated receipts and committed expenditure.

Pointing to the ‘critical’ fiscal situation of the state, the CM also sought the Centre’s permission to allow sale of liquor, in a phased manner, to mop up value added tax and excise revenue.

The Home Ministry should “allow the state to take a conscious decision to allow the sale of liquor in certain areas in a phased manner with strict social distancing and other measures to prevent COVID-19”, he said.

This would help the state immensely in its efforts to scale up the relief and health care measures to combat COVID-19 and meet some, if not all, of its committed liabilities and other day-to-day expenses, he said.

Singh requested the Home Minister for early action, while assuring him of the state’s full and continued support in the efforts of the government of India to overcome the present crisis by effectively managing and containing the COVID-19.

Notably, the Punjab government has projected collection of Rs 6,250 crore from the sale of liquor for 2020-21 in the state, which is known for its high consumption.

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