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March 25, 2020

Bangla CM writes to PM for raising FRBM limit

Bangla CM writes to PM for raising FRBM limit

Chief Minister Mamata Banerjee has urged the prime minister to allow States to borrow more by raising the limit set under the Fiscal Responsibility and Budget Management (FRBM) Act.

In a letter to the prime minister yesterday (March 24), the chief minister said the “lockdowns” and closure of businesses announced by various States, including Bangla, to arrest the spread of the novel coronavirus and COVID-19 would severely restrict their capacity to mobilise resources.

The letter stated that in view of the lockdowns, there could be little doubt that the GST collection, which constituted 70 per cent of the State’s tax collection, would plummet this year.

Moreover, read the letter, with further fall in the tax collection by the Central Government, the devolution of funds to States by the Centre would also suffer.

Keeping these inevitable and near-catastrophic fiscal parameters of the States in mind, she wrote that she would request the prime minister to raise the FRBM limit of the States to at least 5 per cent of their GDP during the financial year 2020-21.