Bihar government not to raise any tax during pandemic: Sushil Kumar Modi

PATNA: On the first day of Unlock1.0, deputy CM and state finance minister Sushil Kumar Modi talked to TOI’s Piyush Kumar Tripathi on how far the state’s economy has been hit by the Covid crisis and challenges in bringing the economy back to normal. Excerpts:
How badly Bihar’s economy has been hit by the Covid crisis?
State’s own tax revenue has been hit badly. As per records, the revenue in April this year was 86% lower than that generated in the same month last year. Moreover, this was the revenue generated in March when there were hardly 10 days under the lockdown. There was complete lockdown in April and May. So, there was a complete tax revenue washout in state for the last two months. Thus, meeting the financial requirement for payment of salaries and pension is also a challenge for us at present.
How has reverse migration aggravated the problem?
Tackling migrants returning home is a challenge, but the government is working out multiple solutions for this issue. As per rough estimates, migrant workers used to send Rs7,000-10,000 to their respective families back home to meet basic requirements. Now it has stopped. We are looking for ways to generate livelihood opportunities for these migrants and their families. Most such opportunities are being generated by roping them in ambitious projects like MGNREGA and seven resolves of the state government.
What steps are being taken for tackling the financial burden?
One thing is for sure that the state government has taken a deliberate decision not to increase any tax during this pandemic for tackling the financial crisis. We will have to wait for the economy to get back on track as financial activities return to normal. Besides, we seek Centre’s support in this time of crisis.
What kind of support Bihar government expects from the Centre?
Bihar depends on central government to a large extent in terms of finances. In fact, we depend on the central government for 75% for our total revenue. The Centre has released the state’s share in central taxes for the month of April and May, but we apprehend that it may reduce for the month of June. Bihar has received around Rs25,000 crore less in terms of state’s share in central taxes in 2019-2020 fiscal. Accordingly, we have made a couple of requests to the Centre, including 100% funding for the centrally sponsored schemes. Besides, we have requested the Centre to increase the ceiling for borrowing under Fiscal Responsibility and Budget Management (FRBM) from 3% to 4% of the Gross State Domestic Product (GSDP). The Centre has already raised it to 3.5% and we want additional 0.5%. This way, we will be able to requisition additional loans to the tune of Rs6,000 crore.
Is Bihar government planning incentives for luring industries, given the large chunk of semi-skilled and skilled workers having returned to the state?
The industries department has already written letters to a number of industrialists and companies. We may amend our Industrial Investment Policy, if required, to make investment in Bihar more alluring for the industrialists.
How much time do you think Bihar will take to overcome the financial crisis?
The economy was already going through slowdown and now a situation of recession has surfaced. The opening up of economic activities has just started and I think it will take at least next two to three months for things to come back to normal. However, bringing back the economy on track will remain a big challenge in months to come.