India

Borrow from RBI and give Rs 1 lakh cr to states: TN CM to Modi

Chennai, March 28 (IANS) Tamil Nadu Chief Minister K. Palaniswami on Saturday requested the Central government to grant Rs 9,000 crore to the state for coronavirus impact relief works after borrowing from Reserve Bank of India.

In a letter to Prime Minister Narendra Modi, text of which was released to the media, Palaniswami said the Central government should provide Rs 1 lakh crore to state governments based on the size of a state's Gross State Domestic Product (GSDP) to the national Gross Domestic Product (GDP).

Urging Modi to look at unconventional measures and setting aside the conventional economic doctrines temporarily, Palaniswami said the Central government can borrow from the RBI to combat coronavirus and also its aftermath.

“Under the Indian public finance system, only the government of India can in an eventuality, borrow freely from the monetary authority, the RBI,” Palaniswami said.

“The economic impact of the lockdown is likely to be very severe and unprecedented. Such difficult times call for unconventional measures to ensure that the economy is revived and re-invigorated,” Palaniswami remarked.

According to Palaniswami, the special grant will also pump prime the economy and lead to its revival.

“In these very difficult and challenging times, as a Prime Minister who has not shied away from taking bold, difficult and unconventional decisions in the interest of the nation, I am confident you would consider this special request and take necessary action,” Palaniswami added.

Palaniswami also recalled his letter dated March 25 to Modi wherein a request was made as a one-time measure, the fiscal deficit limits of three per cent of GSDP may be relaxed for the financial years 2019-20 and 2020-21 and additional borrowing of 33 per cent above the level permitted for the fiscal year 2019-20 may be allowed for 2020-21, to enable the states to meet the additional expenditure requirements.

–IANS

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