Hyderabad: The COVID-19 pandemic, which has unfolded in front of our eyes, threatens to cause devastation in the magnitude of a World War. The countries which failed to take preventive steps have suffered enormous human loss and those which took precautions have faced severe economic distress -- drop of gross domestic productivity to shocking depths.
With the lockdown imposed by India six weeks ago giving preference to human life, the country's economy has literally been admitted into the ICU. Protection of public health is the Constitutional responsibility of the governments. At a time when state governments are mobilising all their energies to save their people from the virus, the catastrophe of financial deficit is posing a real challenge.
The tax revenue that the states themselves collect is 46 per cent, and non-tax revenue is eight per cent; the rest is the share of central taxes (26 per cent) and grants (20 per cent). The important income sources of the state governments, i.e. SGST (39.9 per cent), VAT on petro-products (21.5 per cent), Excise (11.9 per cent), Stamps-Registration (11.2 per cent) and Vehicle Tax (5.7 per cent) have stopped during the lockdown.
Telangana's revenue last month was Rs 5,000 crore; but the real income was just Rs 500 crores. The Uttar Pradesh Govt received Rs 2,284 crores in April and the requirement on account of salaries and allowances itself was Rs 12 thousand crores! It is perfectly reasonable for the state governments squeezed between income and expenditure imbalance, to expect the Centre to provide financial relief to them in these extraordinary war-like circumstances. Due to poor income through tax collections, as compared with the budget estimates, there will be a shortfall of Rs two lakh crores towards transfer of funds to the states, which is really concerning. The Centre must rescue the states from this financial crisis.