Centre asks RBI to deduct Rs 1417 cr from Jharkhand funds against dues, Soren fumes
Jharkhand chief minister Hemant Soren accused the centre of deliberating pushing the state to the brink using agreements made during BJP government in the state.Updated: Oct 16, 2020, 15:50 IST
The central government has directed the RBI to auto deduct Rs 1417.50 crore from the account of Jharkhand government maintained by the top bank, as the first instalment against its power discoms outstanding dues to Damodar Valley Corporation (DVC), a central public sector power generator.
In a communication on October 8, the central power department directed the RBI to invoke the tripartite agreement (TPA)---signed between the Centre, the Jharkhand government and the RBI on April 27, 2017 regarding payment security mechanism---and realise a part of the outstanding Rs 5608.32 crore as on August 13, 2020, said officials aware of the development.
The Centre has argued that the time period indicated in the notice period to the state government has already expired and its response regarding payment of outstanding dues owed by the JBVNL to DVC is not convincing. JBVNL or the Jharkhand Bijli Vitran Nigam Limited is the state’s largest power distribution company.
“Accordingly, in terms of provisions of clause 7.3 of the TPA, I consider this a fit case for invoking TPA and accordingly request you to take further action to debit an amount of Rs 1417.50 crore in the month of October, 2020 from the account of state government being maintained by the RBI and credit it into the account of Ministry of Power, Government of India for onward transfer into the account of the DVC,” power department’s letter to the RBI reads.
The Union power ministry had on September 11 written to the state government, putting it on notice of 15 days for payment of the outstanding dues to the DVC. The state government in its reply on September 25 had questioned the outstanding dues amount being claimed by the Centre. In its reply to the Union power ministry, the state energy secretary had argued, quoting minutes of previous meetings, that the JBVNL owes only Rs 3919.04 crores to the DVC, state government officials said.
The state government further argued that DVC is also required to pay Rs 360.36 crore to the state government for conducting mining activity at the Bermo mines. The state government also pointed out that it has already applied for Rs 1,841 crore from the consolidated fund of Atmanirbhar Bharat to pay off the dues.
Reacting to the development, chief minister Hemant Soren expressed “deep anguish and disappointment at the blatant and continuous attempt by the Centre to impose fiscal penalties on Jharkhand”.
“It’s a veiled conspiracy by the Centre to provoke and trap the state government to increase its borrowing from markets and other instruments in these times of economic instability and fiscal difficulties being faced by the state. BJP’s previous Raghubar Das government through the TPA signed in 2017 laid the foundation stone towards destroying the basic edifice of cooperative federalism,” Soren said.
He also asked if the Centre’s reluctance to pay states their long-standing GST compensation citing the economic impact of Covid-19 pandemic was defendable when it was resorting to auto deduction of thousands of crores from state funds kept with RBI.
Finance minister Rameshwar Oron said earlier this week that the GST dues owed to Jharkhand have risen to around Rs 3300 crore.