States are already feeling the impact of economic slowdown and now Covid will hit them hard from April onwards. It’s been 10-12 days so far and the coming days will be difficult.
How hopeful are you about the Centre relaxing the Fiscal Responsibility and Budget Management Act limit for states to tide over the crisis?
In 2009-10, when a financial crisis hit the global economy, the FRBM limit was relaxed from 3 to 4 per cent. In 2010-11, it was reduced from 4 per cent to 3.5 per cent. So states were allowed an increased limit for two years then. In the video-conference meeting with the prime minister too, Bihar demanded that states be permitted to borrow an additional 1 per cent of GDP. In fact, the 15th Finance Commission has not allowed an escape clause to states. In 2019-20, states got an additional limit of 0.25 per cent, which, if you fulfil certain conditions, could go up to 3.5 per cent. However, in 2020-21 even if you fulfil those conditions, there is no window. We have demanded that the FRBM limit be raised to 4 per cent.
Have you got any response from the Centre on this?
The Centre is yet to respond to that. But they have heard the states’ demand.
What is your estimate about the impact of the lockdown on Bihar’s economy?
For 2019-20, Bihar’s growth in revenue was 15 per cent. In goods and services tax, Bihar reported the highest growth rate at 18 per cent. The combined transport department saw a growth rate of 25 per cent. But the coming days will be tough. Till March 31, we have provisioned for salaries and pensions and that will not be a problem.
Certain states are looking at deferring salaries. What about Bihar?
Unlike Maharashtra, Andhra Pradesh, and Telangana, which have deferred wages of employees, we have decided that we will not do so. While fighting Covid is a priority, so is giving timely salaries and pensions. We will not compromise on it. We will not make any deferred payments or cuts.
In that case, will you be frontloading your market borrowing in 2020-21?
We generally do not borrow in the first quarter, but this time we will borrow in Q1 too if needed. It will be nice if the Centre allows additional borrowing.
How are you looking after the migrant labourers of Bihar who are stuck in other states?
Bihar is the only state that is also looking after its migrant labourers, even those who are still outside the state. We have started paying them Rs 1,000. Those who are stuck in other states will get the Rs 1,000 in their account. We have launched a mobile application for that. In the first two hours of the launch on Thursday, about 40,000 people logged into the app. While we are anyway going to pay people who are within the state, we have done geo-fencing of the app, by which anyone in Bihar or Nepal will not be able to download it to avoid duplication and misuse. There are 16.8 million ration card holders in Bihar who will be able to avail of Rs 1,000. We have started paying three months’ advance pension to our pension holders.