NCP chief Sharad Pawar wrote a letter to Prime Minister Narendra Modi seeking a "suitable" financial assistance to Maharashtra to overcome the challenges created by the coronavirus crisis.
In the letter, also addressed to Finance Minister Nirmala Sitharaman, Pawar pointed out that due to the COVID-19 outbreak and the lockdown, Maharashtra would face a shortfall of Rs 1 lakh crore to sustain the projected expenditure, and urged the Centre to release additional grants of that amount to the state.
"The revenue receipts projected in the 2020-2021 Maharashtra Budget are about Rs 3,47,000 crore and the economic activity is not likely to pick up much in the short term and may improve slightly in the medium term," he said in the letter.
"Accordingly, as per the revised estimates, the expected revenue shortfall would be Rs 1,40,000 crore. This is around 40 per cent of the expected revenue and will leave a huge hole in the state's finances," he added.
The former Union minister, whose party is part of the Uddhav Thackeray-led MVA government in the state, claimed that as per the current borrowing limit, which is three per cent of the GSDP, the state can borrow up to Rs 92,000 crore, of which Rs 54,000 crore have been planned for meeting the capital expenditure requirements for the financial year 2020-21.
"So, it is clear that the state is going to face a shortfall of Rs 1,00,000 crore to sustain the projected expenditure," he said.
Pawar said thatcovering 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 the subdued economy. The state makes a repayment of Rs 10,500 crore every year on account of the NSSF loan given by Government of India," he said.
"It is requested to extend two-year moratorium on loan repayment. Further, it is imperative that in these testing times the Government of India should offer suitable financial assistance to states also," he said.
"The state requests additional grants of untied nature to the tune of Rs 1 lakh crore for the FY 2020-21," he said.
He also cited the examples of the United States of America, Spain, Germany, France, Australia etc, whichhave released financial packages of around 10 per cent of the GDP.
"Furtherroom can be created by the Centre along with the RBI for giving suitable financial package to states," he said.
He listed out industries such as aviation, transport, tourism, hospitality, brick and mortar retail, entertainment, media and the wellness industry, saying it has been hit very harddue to outbreak of novel coronavirus.
"They will have to be re-skilled for alternative employment and alternative businesses will have to be actively promoted," he said while calling for online and internet-based business culture.
Pawar said that India should move fast and take steps to capture the space likely to be released by Chinain the manufacturing sector.
"All the nations have realised the need for a more diverse supply chain in order to have reliability in supplies," he said.
He suggested a proactive engagement with G-20 and BRICS countries in this regard along with a suitable policy framework to encourage these nations to shift manufacturing bases to India.