States ask additional Central funds to tackle industrial slowdown

The State Governments of Andhra Pradesh, Punjab, Maharashtra, Kerala, Uttarakhand, Goa have written to the Prime Minister / Finance Minister of India for inter-alia, provision of additional funds and for the relaxation of borrowing ceilings fixed for 2008-09 under the FRBM Act to tide over the impact of slowdown emerging in the various industrial sectors. A letter was also received from the Empowered Committee of State Finance Ministers requesting the Centre to give special central grant of Rs.20,000 crore to the States for construction and improvement of infrastructure and also not to give "Declared Goods" status for aviation turbine fuel whereby the maximum rate of Sales Tax chargeable by the States would get reduced to 4% and would affect their revenue collections.

The Centre has announced two economic stimulus packages to tide over the current economic slowdown. The first stimulus package included a provision of additional plan expenditure of Rs. 20,000 crore in 2008-09. As a part of the Second Stimulus Package the State Governments have been allowed to raise Rs.30,000 crore as additional market borrowings in the current financial year in relaxation of the borrowing ceilings to undertake capital expenditures. The fiscal deficit target of the States have been increased from 3% to 3.5% to enable the States to raise this additional market borrowing without losing the benefits of debt waiver and interest relief under the Debt Consolidation and Relief Facility (DCRF) guidelines. In addition, the requirement for elimination of revenue deficit by 2008-09 to claim benefits of DCRF as per the Twelfth Finance Commission recommendations has also been relaxed.

Regarding the inclusion of ATF in the list of Declared Goods, it has been decided by the Government of India not to proceed with the proposal for the present.

This information was given by Finance Minister, Shri Pranab Mukherjee in reply to a question raised by Smt. Suprya Sule and Dr. T. Subbarami Reddy in Rajya Sabha today.

Source : Equity Bulls

Keywords