Covid-19: Tamil Nadu CM seeks Rs 9,000crore grant from Centre

CHENNAI: Tamil Nadu chief minister Edappadi K Palaniswami on Saturday requested Prime Minister Narendra Modi to extend a grant of Rs 9,000 crore to the state to combat Covid-19.
In a letter to Modi, a copy of which was released to the media, the chief minister said the economic impact of the lockdown was likely to be severe and unprecedented. Such difficult times call for unconventional measures to ensure that the economy was revived and reinvigorated.“Conventional economic doctrines and dogmas will need to be set aside temporarily,” the CM said, listing out the demands.
In addition to allowing the additional borrowing by the state governments, the Centre should provide an aggregate amount of at least Rs 1 lakh crore as a special grant to the state governments, Palaniswami said.
“This needs to be in addition to the other forms of financial transfers to the states envisaged in the Union budget and can be financed by the Union government from the Reserve Bank of India,” the CM said, adding that the fund could be distributed in proportion to the size of each state’s GSDP to the national GDP.
He recalled his recent letter to Modi, seeking a one-time measure of relaxing the fiscal deficit limits of 3% of GSDP for the years, 2019-20 and 2020-21. Additional borrowing of 33% above the level permitted for 2019-20 may be allowed for 2020-21 to enable the states to meet the additional expenditure requirements.
Palaniswami highlighted the substantial expenditure required to strengthen the availability of health infrastructure and medical supplies. “Eventually, measures will also have to be taken to revive economic growth, assist various sectors to return to their growth trajectory and to stimulate consumption and investment demand,” he said.
All governments will suffer substantial reductions in tax and revenue receipts. It will not be possible to step up revenue raising for a while. “However, the expenditure needs, and responsibilities will not wait,” the CM said.