Assam on Wednesday “suspended all expenses” pertaining to industrial exemptions, subsidies and incentive of various sectors as an austerity measure to tide over its financial constraints due to the corona-induced lockdown.
The move left the lockdown-hit industry circles here crestfallen. The measures will also impact government officials and public representatives, among others.
The government said the industries would not get reimbursement of GST in the first quarter of the current financial year.
Official sources said the state annually collects about Rs 9,500 crore in GST of which about Rs 350 crore is reimbursed.
The lockdown has seen monthly GST collection of about only Rs 130 crore against Rs 900 crore. Overall, there is 80 per cent fall in revenue collection in April.
Assam finance minister Himanta Biswa Sarma said the austerity measures, approved by the state cabinet, have been taken to tide over the financial crisis triggered by 80 per cent fall in its GST collection during the lockdown period.
“The measures will be lifted if the situation improves and will be further tightened if situation deteriorates,” he said.
Apart from GST reimbursement, subsidies on electricity duty, capital subsidy and transport, a small component of the overall exemption/incentive, will also remain suspended for the first quarter, official sources said.
The industry reacted along expected lines.
“We are very disappointed with the government stopping disbursement of subsidies and GST. This will further hamper the normalisation of the state economy,” said Abhijit Barooah, co-chairman, CII North East Council.
“The industry was expecting that the government would help it by giving concessions. We were expecting that subsidies would be expedited. We have to pay wages and meet other expenses too. Without concessions and financial help from the government, many micro small and medium enterprises (MSME) units would permanently close down,” he said.
Pabitra Buragohain, president of Federation of Industry and Commerce of North Eastern Region (Finer) said he was examining the measures and would respond after discussions with his members. Finer members, on condition of anonymity, said these measures were the last thing they wanted.
The adviser of North Eastern Tea Association, Bidyananda Barkakoty, said, “As per our understanding, the austerity measures will apply to industries availing or likely to avail exemption under the state industrial policies. Therefore, it may not affect our green leaf cess and agriculture income tax exemptions.”
Sarma had hinted on Tuesday: “Assam’s devolution of Rs 24,000 crore a year from the central government’s pool of funds sustained the economy along with nearly Rs 13,000 crore of the state’s own earnings and in view of financial slowdown, innovative measures must be devised to overcome this crisis.” The GST collection this month is only Rs 193 crore as against Rs 932.36 crore in April 2019, Sarma said.
The austerity measures were announced a day after chief minister Sarbananda Sonowal had said that Dispur would prepare long and short-term plans and implement them in a time-bound manner to bring the state’s economy back on track, after three hours of discussions here with 29 economists to take their suggestions on how to revive the state’s economy hit by the lockdown.
Apart from industry, the austerity measures will also affect government officials, judges, MLAs, ministers since the government has banned executive class air travel for all public representatives or government officials except the governor, chief minister, chief justice and judges of Gauhati High Court and state chief secretary.
Sarma said the government will also not hold any conference, workshop or seminar in the first four months for this financial year. “If something needs to be discussed, we will do it through video-conferencing,” he said.
The government, however, will pay full salary to its employees in May. Assam needs Rs 3,600 crore every month to pay salary of its employees and pension to its retired employees.
The governor, chief minister and council of ministers have already decided to donate 30 per cent of their salary to the chief minister’s relief fund.
The other austerity measures include:
- Ban on departments from announcing any new development scheme without concurrence of the finance department, decision to reduce establishment expenditure to 10 per cent from 25 per cent.
- Except ambulance and vehicles for police duty, other departments have been barred from buying vehicles without consent of the chief minister.
- The general administration department will use discretion in declaration of visiting dignitaries as state guests, no officer will be allowed to attend any foreign training course or workshop or seminar abroad on government expense.
- Remuneration of chairman and vice-chairman of all public sector undertakings, corporations and boards reduced by 25 per cent from May and suspended release of MLA area development fund in the first four months of the current financial year.
Additional reporting by our special correspondent in Guwahati