COVID-19: Worried state forms panel to tackle economic crisis

Updated: Apr 10, 2020, 09:14 IST | Dharmendra Jore | Mumbai

MVA made the move speculating a national financial emergency which will put the Centre in power of all economic decisions; one panel to be headed by deputy CM Ajit Pawar

A completely empty road in the city becomes an eerie reminder of just how much the economy has suffered. Pic/ Suresh Karkera
A completely empty road in the city becomes an eerie reminder of just how much the economy has suffered. Pic/ Suresh Karkera

Staring at a revenue loss of Rs 35,000 crore owing to the pandemic, the Maharashtra Government has set up two high-power committees. Of the cumulative loss, the state suffered R25,000 crore in the month of March 2020 alone, with little hope of making up for it anytime soon.

The committees were formed over speculation of the Narendra Modi-led entral government imposing a national economic emergency. In that case, the Centre's executive authority would extend to issuing directions to any state on financial matters. Article 360 of the Constitution provides the Centre for asking the President to enforce a financial emergency if the financial stability or credit of the country is threatened. A financial emergency has not been imposed in the country yet.

As suggested by the Maharashtra Cabinet, one panel would prepare measures to revive the economy with assistance from economists, experts from industry and service sectors, retired bureaucrats and finance department officials. The other committee would include a political arm of the state apparatus, to be led by Deputy Chief Minister Ajit Pawar, who also heads the finance department. This group will have senior cabinet ministers.

Biggest loss in March

As compared with the corresponding period last year, the state received R25,000 crore less in revenue till March this year. This loss was incurred over just one month of March 2020 owing to the Corona crisis that stalled almost all revenue-generating commercial activities. Taxpayers haven't been able to service revenue demands because they don't have the required money at hand. The disbursement of goods and service tax (GST) compensation of R21,170 crore from the Centre has been delayed. Taxes on petroleum and alcoholic beverages that state government levies and collects have dropped in March because of the lockdown.

Further restrictions on the state coffers will depend upon the Union Government's financial assistance, austerity measures such as deferring salary payments, reducing establishment expenses, and cuts in salaries of public representatives. The government has also said that the employees who mark 50 per cent attendance would get full salaries in future.

Realty wants to resume work

Real estate sector, which gives states massive revenue and creates jobs, has asked for permission to resume construction work across the country. Maharashtra's share in real estate is one of the highest in the country, with Mumbai and its metropolitan area giving much more in revenue and jobs. The National Real Estate Development Council explained its position to union housing secretary Durgashankar Mishra, assuring him that the developers have made lodging and boarding arrangements for the labourers and would follow pandemic prevention measures if allowed to resume work.

CM's nomination

At Thursday's cabinet meeting headed by Pawar, CM Uddhav Thackeray remained absent since the Cabinet was to recommend his name for appointment as MLC under the Governor's quota of the legislative council. There are two vacancies in this particular category. It is unlikely that governor Bhagat Singh Koshyari would reject the Cabinet's recommendation because the biennial elections, where Thackeray was to be elected as an MLC, have been postponed in view of the pandemic. Thackeray's six-month deadline for an into the Legislative Council is May 27 since he was sworn-in as CM on November 28 last year. Koshyari had put the previous two recommendations on hold.

Salary cut for MLAs

The Cabinet also decided to cut all MLAs' salary by 30 per cent to raise funds for the pandemic. Earlier, it had decided to allot Rs 50 lakh each from MLAs development fund for the pandemic mitigation. The cut would be in force from this month up to April 2021.

The cabinet also suggested that the lockdown should continue in places where the pandemic has created havoc. Several ministers said the vegetable markets in the cities were violating social distancing norms and should be shut down completely with home deliveries as an alternative.

Sources said that the Vashi potato and onion market would not operate till the lockdown is lifted. Pune's market yard has been shut till further orders. Kalyan market would also be shut anytime soon. In Mumbai, markets in containment areas have also been shut.

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