Financials Fighting Covid-19: Priority on Managing Financial Prudence During Pandemic

Bhubaneswar: With the alien disease starting to spread its tentacles in the country in late February and early March, it was the first priority for all governments to take steps to contain it. The emergency policy-making required measures such as lockdown, screening, immediate investments in healthcare infrastructure and preparing manpower to deal with the situation. Odisha, being one of the proactive states in taking measures to contain the viral disease, initiated the crisis management efforts at an early stage with Chief Minister Naveen Patnaik monitoring the situation continuously.

On March 13th 2020, after meeting of the Cabinet Ministers and state officials, Chief Minister Naveen Patnaik announced that the government has earmarked Rs 200 crore to combat coronavirus threat in the state. Odisha was one of the first states in the country to provide a sizable amount to fight the Coronavirus. Naveen said the funds will help augment Public Health Response Fund to combat threat of the pandemic and for making required expenditure.

With this, the government also decided to curtail non-essential official gatherings such as seminars, workshops and conferences. The Health and Family Welfare Department and its directorates, as well as the collectors and the municipal commissioners were authorised for making emergency procurement of necessary drugs and consumables and equipment to prevent and contain the spread of the disease.

The imposition of lockdown in Odisha on March 23rd and the subsequent nationwide lockdown announced by the Center brought all economic activity to a standstill. The state government sensing the need and severity of the situation decided to take some measures that would help in its fight against the pandemic.

After Telangana and Maharashtra, Odisha Government decided to implement some austerity measures in terms of pay cuts of Ministers, Bureaucrats and the Chief Minister. On March 31st, Odisha government issued an order for deferment of a portion of the salary of the Chief Minister, all Ministers and the All India Service officers as part of its austerity measures to tackle COVID-19. The decision was taken in view of the economic downturn caused due to lockdown and higher expenses being incurred in the fight against COVID-19.

As per the order, the deferment ranged between 70 per cent in the gross salary in respect of the chief minister, ministers, MLAs, chairpersons of all state-run corporations and elected representatives of all local bodies. Similarly, there was a deferment of 50 per cent salary in respect of All India Service Officers like Indian Administrative Service (IAS), Indian Police Service (IPS) and Indian Forest Service (IFS).

After nearly three and half months of lockdown and a full stop on economic activity, the livelihood of millions of people got affected and Odisha was not above it. The livelihoods of particularly the downtrodden poor people, daily wage earners, small businessmen, farmers and the migrants were affected by the lockdown. As in all other states, Odisha also had to face the situation. The homecoming of more than half a million migrants called for immediate action by the government.

At this critical juncture, On May 29th, Odisha announced Rs. 17,000 crores Special Livelihoods Intervention Plan that intended to create jobs for the worst affected sections including the migrant workers and farmers. Chief Minister Naveen Patnaik announced the decision after the meeting of the Council of Ministers that the package will continue till March 2021.

The biggest task at hand for the Government of Odisha was to resurrect the economy and restore livelihood activities hampered by the Pandemic. The Special Livelihood Intervention Plan was launched in June and will be in force till March 2021.

Divulging the details of the package, Chief Secretary Asit Tripathy said that “The livelihood support programme will be implemented in rural areas to provide support to the people who have been hit hard by the lockdown”. He also said that “the State is facing an unprecedented economic crisis due to the pandemic that has been aggravated by the return of nearly four lakh migrant workers from other states and the number still rising. The immediate job at hand is to ensure everyone has access to livelihood opportunities. ”

The plan aimed at generation of employment opportunities in agriculture, fisheries and animal resources development, MGNREGS, forest, and handlooms and handicrafts sectors. The focus was on farmers and daily wage earners. The Government also took several measures for the industrial, tourism and other employment generating sectors. The package included Rs 6,440 crore for MGNREGS scheme with an aim to generate 20 crore mandays for 46 lakh persons. To rehabilitate the returned migrants, the plan provided Rs 140 crore which would be spent on their skill development. The Panchayati Raj department was assigned to train 40,000 returnees migrants.

The plan also made provisions of Rs 373 crore which will be spent on agriculture and allied sectors for the benefit of over 24.57 lakh farmers. The Cabinet meeting following the Council of Ministers also approved 22 proposals with focus on reviving various sectors. It approved an amendment to the Odisha Tourism Policy 2016 to ease land allocation for hotel projects.

The guiding principle of Odisha Government’s fiscal strategy during the pandemic has been ‘Life Before Everything Else’. Highlighting the State Government’s priorities and the strategies in fighting the Coronavirus, Chief Secretary Asit Tripathy said “The in-principle decisions taken by the Council of Ministers, in a nutshell, are that all social security measures will continue; health, education and livelihood interventions will get priority; ongoing work will not be stopped; new expenditure in the non-priority sector will be restricted; the government will go for prudent borrowing, and a new way of working especially digital working will be accelerated”.

The Government of Odisha also took measures to relook at the budgetary allocations to different department. While all the expenditures of the Health Department remained the topmost priority of the government, as per the in-principle decision of the Council of Ministers, medical expenditure, expenditure for medical equipment were fully funded by the government and it was decided that no inadequacies will be permitted.

The government also made social sector interventions for income generation of the economically vulnerable groups like migrant labourers in interior pockets. The Council of Ministers also decided that there will be no compromise made in agriculture, horticulture, animal husbandry, and fisheries sectors. The Government decided to restrict the capital expenditure on new schemes in the non-priority sectors.

Anticipating a fall in devolution of funds from the Center, Odisha decided to go for market borrowing within 3.5% as allowed under the Fiscal Responsibility and Budget Management Act (FRBM). The Chief Secretary said that sufficient funds were available with the government under the CAMPA (Compensatory Afforestation Fund Act) funds and Odisha Mineral Bearing Areas Development Corporation (OMBADC) fund.

Odisha decided to borrow from the two finds – CAMPA and OMBADC, as they have a low-interest rate of 3% instead of expensive market borrowing.

Odisha Chief Minister Naveen Patnaik approved a special package of Rs 200 crore for the poor and extremely poor families in the State affected due to Covid-19 pandemic. The CM said, “Emphasizing upon the revival of the rural economy, approved a special assistance package of Rs 200 crore for the poor and extremely poor families in the State affected due to Covid-19 pandemic. The special package will help the development of livelihood activities of rural poor, very poor and the migrants.”

“Members of Women Self Help Groups can revive their family enterprises through this package. It will also benefit rural, nano and micro-enterprises; skilled and semi-skilled migrant returnees and producer and enterpriser groups engaged in the agricultural and non-agricultural sector,” he added.

Naveen also directed the officials to provide more credit facilities in MSME, agriculture, fisheries and animal resources. He also directed to provide subsidised loans for small business activities to be undertaken by Women Self Help Groups.