WB feels lockdown pinch as monthly revenue drops by ₹5,000 cr

Amid lockdown, the power company could realise only ₹350 crore, incurring a revenue loss of ₹1100 crore, indicating to a cumulative monthly loss of ₹5,000 crore for all revenue earning departments

West Bengal, Lockdown, COVID-19, coronavirus, revenue loss, salaries, pensions
West Bengal Chief Minister Mamata Banerjee with State Finance Minister Amit Mitra. File Photo: PTI

Sustaining the lockdown beyond May will be difficult for the West Bengal government, which is already feeling the pinch to even shell out about ₹6,000 crore for the payment of salaries and pensions.

The biggest challenge for the government to lift the restrictions anytime soon is the recent spike in numbers of COVID-19 cases as well as mortalities. In the past 24 hours (between May 6 and 7), 92 new cases were detected taking the total number of confirmed cases to 1,548 in the state.

During the same period seven more COVID-19 patients died, increasing the death toll to 151. The rise in numbers is compelling the state to contemplate further extension of the restrictions, particularly in the worst affected areas.

Sources from the finance department, however, said that there is an immediate need to normalise economic activities to stop revenue loss.


If the loss is not stemmed, it will be difficult to pay salaries for the month of May to 8.5 lakh government employees, including 5 lakh teachers, sources said. Salaries of another 1.5 lakh employees of municipal corporations, municipalities, and government-run companies are also at stake, they added.

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“We have no cash flow to pay salaries and pension to our employees and pensioners,” State Power Minister Shobhondeb Chatterjee said.

He was referring to the cash crunch in the West Bengal State Electricity Distribution Company (WBSEDCL), which is now contemplating to seek bank guarantee from the state government to take loans to pay salaries for the month of May to its 18,000-odd workers.

During this lockdown period, the power company could realise only ₹350 crore, incurring a revenue loss of around ₹1100 crore.

The company sources said the loss amount will cross ₹2000 crore by May 17 when the current phase of lockdown concludes.

The situation is the same for almost all revenue earning departments, leading to a cumulative monthly loss of ₹5,000 crore. To bridge some gap, the government is now trying to raise revenue through liquor sales. Till May 6, it earned around ₹40 crore by selling liquor worth ₹130 crore.

The overall tax revenue has shrunk by about 80 per cent, sources said.

To tide over the crisis, the state government had earlier urged the Reserve Bank of India (RBI) to allow it to borrow from the market more than 50 per cent of its full year’s borrowing limit of ₹20,262 crore in the first three months of the current fiscal (April to June).

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In view of the drop in receipts due to the lockdown, the finance ministry allowed all the states to borrow their yearly quota from the market between April to December.

The West Bengal government has been told that it could borrow around ₹10,000 crore by September, of which, according to finance department sources, it has already borrowed ₹2000 crore from the market.

“With almost all states trying to raise funds from the open market through bonds, there are now more borrowers than lenders. This has pushed up the interest rate to hefty 8 to 9 percent. But not many investors are willing to lend even in higher interest rates because of their own liquidity crunch,” a finance department source said.

With its option of raising money shrinking, the finance department is now considering taking ways and means to advance (WMA) from the RBI to meet its regular expenses. The central bank has already given the state some reprieve by increasing the per day WMA limit to ₹1,500 crore, from about ₹900 crore with a repayment window of 90 days.

The RBI also increased the overdraft period for a state to 50 working days from the current stipulation of 36 working days in a quarter.

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But these are short-term measures, the finance department sources pointed out that the economy could only be revived through regular flow of revenue for which the Centre needs to look beyond the lockdown or give a bailout package to the states.

The West Bengal government has also urged the Centre to clear dues of ₹50,000 crore and a moratorium on payment of interest on debt to sustain the lockdown.

They said the restricted-relaxation given in the state’s eight COVID-19 green zone districts did not spur enough economic activities as it is not considered economically viable to operate with limited manpower.