Lockdown impact on state economy: UP sets up panel to work out strategy for future

The state government has begun studying the impact that the 21-day lockdown may have on the state economy and a strategy is being worked out to formulate the future

The state government has begun studying the impact that the 21-day lockdown may have on the state economy and a strategy is being worked out to formulate the future course of action for Uttar Pradesh.

HT Image

“To study the impact of the coronavirus pandemic and work out a strategy for future,” reads a government notification released to the media here on Friday about the committee to be constituted for this purpose.

The notification was issued following chief minister Yogi Adityanath’s announcement about setting up of 11 committees as part of Corona Action Plan worked out to monitor the situation and suggest measures to be taken on various fronts.

The additional chief secretary, finance, will head the committee that will have the principal secretaries of agriculture, industrial development, horticulture and food processing departments and the sugar industry as members. This committee is one of the 11 committees announced by the chief minister.

Seventeen districts of the state have been effectively under lockdown since March 22, when a day’s Janta Curfew was observed across the state.

A complete lockdown has been enforced all over the state with effect from March 25 following Prime Minister Narendra Modi announcement of a 21-day nationwide lockdown.

As a major chunk of tax collections and other revenue of the state government comes only in the last quarter, the lockdown beginning in the closing week of the financial year (2019-2020) is likely to have an adverse impact on the state’s finances.

Measures being taken to provide medical facilities and financial relief to labourers/workers and others affected by the lockdown are also likely to further strain to the resources of the state government.

The committee may have its first meeting in the next two days.

“This committee may meet soon. But the committee has a challenging task ahead as the state’s tax collections are coming down and the expenditure is going up further,” said a senior officer on condition of anonymity.

The committee may have to suggest measures to increase revenue amid the ongoing relief measures being announced for the people.

The state government has already committed itself to pay Rs 1000 per month to different categories of workers.

It has also decided to distribute free food (20 kg wheat and 15 kg rice) to other categories of workers, including MNREGA workers and Antyodaya card holders in both urban and rural areas.

Early pension is to be paid to those covered under old age, disabled and widow pension schemes and the state government may need additional funds to provide more relief.

The committee’s task will, therefore, become more challenging in coming weeks. The state government has increased the size of annual budget for 2020-2021 to Rs 512860.72 crore, an increase of 6.9 per cent against estimates for 2019-2020.

As the state’s share in central taxes is likely to come down marginally following recommendation of the 15th Finance Commission for 2020-2021, the state government will have to evolve ways to mobilise additional resources.

In 2019-2020, the state government’s projections for receipts and expenditure and the revised estimates present not a very bright picture.

The UP government’s total receipts were estimated to be Rs 470,684.48 crore in 2019-2020. The revised estimates for the year, however, have shown a decline. The state’s receipts are expected to be down by Rs 31,468.95 crore to Rs 439,215.53 crore during the period. This is mainly because of decline in receipts from state’s own taxes by Rs 6137.07 crore, decline in state’s capital receipts by Rs 10,000 crore and state’s share in central taxes by Rs 17550.98 crore. The state government’s expenditure on payment of salary, pension and interest is estimated to go up from Rs 166328.90 crore in 2018-19 to Rs 224561.03 crore in 2020-21. Its expenditure on debt servicing is also estimated to go up from Rs 52758.70 crore in 2018-2019 to Rs 62988.69 crore in 2020-2021.