Telangana Chief Minister K. Chandrashekhar Rao on Saturday urged Prime Minister Narendra Modi to announce Rs 10.15 lakh crore Quantitative Easing to counter what he called the impending recession.
Rao said that though the lockdown had crippled the economy, it needs to be extended till April 30 as the economic activity can be revived but human lives once lost cannot be revived.
The Chief Minister in a letter to Modi suggested that the only way to counter the impending recession is through Quantitative Easing (QE) and the effective use of 'helicopter money'.
"Quantitative Easing proposed should be at least 5 per cent of GDP of the country. As per the Central Statistical Office, the 2019-20 GDP of India is Rs 203.85 lakh crore and QE at 5 per cent works out to Rs 10.15 lakh crore," Rao wrote.
The Chief Minister said this approach was being followed by all major central banks of the world.
"All over the world, the central banks have taken very bold measures to counter the global recession which is worse than the Great Depression of 1929 and global financial crisis of 2008. Distressed times need desperate measures," he said.
KCR, as Rao is popularly known, told a news conference on Saturday night that he also put forward his demands before the Prime Minister during the latter's videoconference with the Chief Ministers of all the states earlier in the day.
He said QE was required to help all the sectors, including informal business sector, industrial workers, the poor and farmers.
The Chief Minister said the revenue of the states had become nill. "As compared with the proportionate monthly revenue of Rs 4,000 crore, the actual collections are abysmally low at only Rs 100 crore in April 2020 in Telangana and borrowings seem to be the only option."
He demanded that the FRBM limits on the fiscal deficit may be increased from 3 per cent to 5 per cent of GSDP for a period of one year to counter unprecedented slowdown
"To reduce the cash outflows and conserve resources to fight the recession, it is requested that the entire debt service (principal repayments and interest payment) of all the SDL loans, and the loans taken by state PSUs based on state government guarantee and negotiated loans may be deferred by two quarters and the ways and means advance, increased by 30 per cent recently by the RBI to manage temporary mismatches in liquidity may be further increased by 100 per cent," KCR wrote.