Report seeks special financial help for resource-starved Bihar

The report said the crisis has huge economic implication for Bihar with the limited fiscal space to provide financial support from their own resources

A significant reduction in the Centre’s revenue collection will affect Bihar’s finances badly and it will be impossible for the state to compensate for the shortfall from alternate sources even if it tries to explore the possibility of generating more revenue from its own sources, a Patna think- tank’s report has said.

The report said there is also an additional dimension of the economic impact--the return of migrant workers and the loss of remittances that they used to send to their families in Bihar. (Representational Photo/HT)

The report titled ‘COVID-19: Issues and Challenges for Bihar’, was released on Friday at Patna’s Asian Development Research Institute (ADRI). It said the crisis has huge economic implication for Bihar with the limited fiscal space to provide financial support from their own resources. The report added the state has faced the dual challenges of handling the usual calamities of flood at the same time as the unprecedented pandemic. “Hence, the Bihar government cannot handle those challenges without special financial support from the Central Government, as the reduced transfer on account of lower tax revenue pool of the Centre will affect the fiscal balance of the State.”

It said there is also an additional dimension of the economic impact--the return of migrant workers and the loss of remittances that they used to send to their families in Bihar.

“During the initial phase of lockdown migrants returned in huge numbers. MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act], a demand-based employment programme, proved to be an effective short-term relief measure for providing employment, especially for the rural and unskilled workforce. The state government took many short-term measures to handle the crisis but a lot more needs to be done to mitigate the impact in the medium to long term,” the report said.