Kerala hails raised borrowings, allocation to MGNREGA
Thiruvananthapuram: Economist turned State Finance Minister Thomas Issac on Sunday welcomed the announcement made by Union Finance Minister Nirmala Sitharaman when she raised the borrowing limits of states from three per cent to five per cent of GDP, for financial year 2020-21, acceding to the demand of the states.
Speaking to the media here, Issac said it was Kerala Chief Minister Pinarayi Vijayan, who first raised this demand and now we welcome this new announcement.
“The revenue loss for Kerala on account of Covid-19 is around Rs 39,000 crores and with the borrowing limit now raised to 5 per cent, we will get about Rs 18,087 crores. But this is only half of our loss and hence the GST component for the states also should be given in full,” said Issac and pointed out that the calculation should be made on the basis of the allocation made in the Central budget and not on the current GDP, which will soon turn negative for both state and Centre.
He, however, expressed his reservation in certain guidelines to be accomplished for this.
“This is not fair as what’s given to states have to be repaid with interest. Certain guidelines imposed for this includes ration cards — which we have no issues. If the new norm of the public sector enterprises’ is a condition, then we will object to it. We also will oppose the power sector reforms. It’s unfortunate that the Centre is using Covid times to engage in unwinding the PSEs. We expect the Centre will initiate a round of discussions with the states before this is implemented. Let us discuss this,” added Issac.
He also welcomed the additional allocation of Rs 40,000 crore under the Mahatma Gandhi National Rural Employment Guarantee scheme (MGNREGS).
“What we suggest, the need of the hour is people do not have money with them, so what should happen is half of the wages what people got under this programme in the last year should be given in advance and as they engage in work, from now on, it can be reduced. I would suggest even this present allocation won’t be enough, as when this is translated to working days, it would suffice only for around 60 days, so more allocation would have to be made,” added Issac.
“..GDP, which will soon turn negative for both state and Centre” — Did not expect this from an erudite finance expert and minister.
It is not GDP will turn negative. What may turn negative is GDP growth. There is a huge difference!