As of April 22, Uttar Pradesh has seen 1,449 cases of coronavirus disease (COVID-19) and accounts for 6.8% of the total cases in India. Of the 1,449 persons infected of the disease, 173 have recovered and 21 have died (3.1% of the total deaths in India due to the disease). These proportions are quite lower as compared to the state’s share in the country’s population (16.5% as per Census 2011). However, the same holds for the number of persons tested for COVID-19 as well, as of the 4.85 lakh persons tested in India, 37,490 persons (7.7%) have been tested in Uttar Pradesh.
To mitigate the spread of COVID-19 in the state, the state government has taken various measures over the past 2-3 months, spanning across areas such as health, law and order, and social welfare. This includes imposition of lockdown in 16 districts starting March 23, which was extended to the entire state on March 24, before the nation-wide lockdown came into effect. This blog post looks at the key measures taken by the state government in response to COVID-19 and the lockdown.
Before the lockdown
One of the earliest steps the state government took in response to COVID-19 was on January 27, when it planned to set up a 10-bed isolation ward in every district hospital and medical college, and increased vigilance on the Indo-Nepal border and airports. Subsequently, on March 15, it ordered all travellers coming from foreign countries to be kept under surveillance and quarantine for a period of 14 days. Between March 13 and March 17, the government ordered the closure of educational institutions, cinema halls, museums, and tourist spots to prevent public gatherings. On March 20, this was extended to include malls, and all religious, social, and cultural activities. Further, to prevent unnecessary crowding, government hospitals were ordered to provide emergency services only.
Welfare measures: The state government also undertook certain relief measures to provide aid to the persons affected due to COVID-19 and the consequent loss of economic activities. These include: (i) free treatment for all persons infected with COVID-19, (ii) order to all employers to provide 28-days paid leave to infected or quarantined persons under the Epidemic Diseases Act, 1897, (iii) another order under the Act to all shops and factories to provide paid leave to all workers if the government orders temporary closure of their business, (iv) free one-month ration to 1.65 crore registered construction workers and daily wage labourers for April, and (v) Rs 1,000 per month of direct cash support to 20.4 lakh registered construction workers, and to 15 lakh street vendors and other unregistered workers.
During the lockdown
During the lockdown, the state government’s measures have been aimed towards: (i) strengthening the medical response in the state, (ii) providing relief to various sections of the society from issues being faced during the lockdown, including UP migrants in other states, and (iii) addressing difficulties being faced in the supply of essential goods and services. For implementation of these measures, the government constituted 11 committees on March 26 for the work related to various departments. On April 13, similar committees were constituted under the respective Ministers.
Healthcare
Medical facilities: On March 23, committees were constituted in each district to determine the process for purchase of emergency medical equipment. On March 25, the government ordered each of the 51 government and private medical colleges in the state to set up isolation wards of 200-300 beds. It also proposed to conduct training programmes at district-level for AYUSH doctors, nursing staff, retired health workers, and officers of army medical corps. This was subsequently made more comprehensive by including lab technicians, ward boys, and sweepers.
Testing: On April 3, the government ordered setting up one testing lab in every medical college, or in a district hospital, in case there is no medical college in the district. On April 20, the government decided to encourage the use of pool testing within the state to contain the spread of COVID-19. It also approved consideration of plasma therapy as a treatment option for COVID-19.
Funding: On April 3, the UP COVID Care Fund was set up for strengthening treatment facilities in medical colleges, and for expenditure on personal protection equipment, test kits, ventilators, isolation and quarantine wards, and telemedicine. Subsequently, two Ordinances were promulgated on April 8 to deduct the salaries and allowances of Ministers, MLAs, and MLCs for 2020-21 by 30% to donate Rs 20 crore to the UP COVID Care Fund. Further, Rs 1,509 crore was made available for the Fund by suspending the Local Area Development scheme for legislators for a period of one year. In addition, the government increased the limit of the Contingency Fund from Rs 600 crore to Rs 1,200 crore through an Ordinance to allow for extra-budgetary expenditure on COVID-19 related measures.
Hotspots: On April 8, the government sealed the hotspot areas across the state by prohibiting any movement in the area. Only medical, sanitisation, and doorstep delivery teams are allowed to enter and exit the hotspot areas, and all enterprises are required to be completely closed. The government has also ordered for door-to-door checking of the residents living in hotspot areas.
Essential goods and services
Other than the distribution of ration, the state government is providing food to persons staying in night shelters, with community kitchens being set up for persons who are unable to cook. On April 17, the government made access to the Public Distribution System (PDS) universal till June 30, irrespective of the availability of ration card and Aadhaar card. In case of death of a person, his ration card, maintenance allowance, and other benefits will be provided to his family as per their eligibility.
To prevent profiteering from sale of essential goods, on March 28, the government ordered the shopkeepers to display the price list in their shops. On March 29, the government decided that the supply of electricity and water will be ensured and these connections will not be cut for one month. Subsequently, it also ordered that fixed charges for electricity will not be levied for industries during the period of lockdown. On April 3, the government ordered banks to remain open on holidays so that government relief assistance is available to the beneficiaries.
Migrants
From other states: On March 26, the state government decided that migrant workers travelling through the state to other states such as Bihar will be provided food and shelter, and sent safely to their destination. Subsequently, on March 28, the government decided to prepare the list of migrants who came to the state, provide them food, and keep them under surveillance and quarantine. On April 22, the government allowed migrants from other states to go back to their home state if the respective state government decides to take them back.
From UP: The state government requested other states to provide food and shelter to the migrants from UP present in their states, and requested the migrants to stay where they are. To provide further support to migrants, the state government appointed senior administrative and police officials as nodal officers for each state where migrants from UP might be present. These nodal officers are the main points of contact for migrants living in the respective states. They are also responsible for coordinating with the respective state government and local administration to ensure the essential needs of migrants such as food and shelter are met, and alleviate their difficulties, if any.
On April 19, the government brought nearly 8,000 students who were studying in Kota back to the state. The government allowed them to be kept in quarantine in their homes provided they download the Aarogya Setu app.
Economy
The state government is encouraging the purchase of produce by Farmer Producer Organisations directly from farms as an alternate option to mandis. On April 13, the government formed a committee of officials to prepare a workplan for attracting investment made by countries such as USA and Japan, which is moving out of China, to the state. In this regard, the government is planning to contact the embassies of various countries. On April 19, it constituted another committee to work towards providing employment to about 5 lakh migrant workers who have returned to the state in the last 45 days. On April 20, the government also allowed construction work on expressway projects to begin after preparation of an action plan. In line with the advisories issued by the central government, the state government decided to provide relaxations from the lockdown in districts with less than 10 cases starting April 20. The district administrations are preparing action plans for opening up industries in these districts, excluding the ones situated in the hotspot areas.
In November 2017, the 15th Finance Commission (Chair: Mr N. K. Singh) was constituted to give recommendations on the transfer of resources from the centre to states for the five year period between 2020-25. In recent times, there has been some discussion around the role and mandate of the Commission. In this context, we explain the role of the Finance Commission.
What is the Finance Commission?
The Finance Commission is a constitutional body formed every five years to give suggestions on centre-state financial relations. Each Finance Commission is required to make recommendations on: (i) sharing of central taxes with states, (ii) distribution of central grants to states, (iii) measures to improve the finances of states to supplement the resources of panchayats and municipalities, and (iv) any other matter referred to it.
Composition of transfers: The central taxes devolved to states are untied funds, and states can spend them according to their discretion. Over the years, tax devolved to states has constituted over 80% of the total central transfers to states (Figure 1). The centre also provides grants to states and local bodies which must be used for specified purposes. These grants have ranged between 12% to 19% of the total transfers.
Over the years the core mandate of the Commission has remained unchanged, though it has been given the additional responsibility of examining various issues. For instance, the 12th Finance Commission evaluated the fiscal position of states and offered relief to those that enacted their Fiscal Responsibility and Budget Management laws. The 13th and the 14th Finance Commissionassessed the impact of GST on the economy. The 13th Finance Commission also incentivised states to increase forest cover by providing additional grants.
15th Finance Commission: The 15th Finance Commission constituted in November 2017 will recommend central transfers to states. It has also been mandated to: (i) review the impact of the 14th Finance Commission recommendations on the fiscal position of the centre; (ii) review the debt level of the centre and states, and recommend a roadmap; (iii) study the impact of GST on the economy; and (iv) recommend performance-based incentives for states based on their efforts to control population, promote ease of doing business, and control expenditure on populist measures, among others.
Why is there a need for a Finance Commission?
The Indian federal system allows for the division of power and responsibilities between the centre and states. Correspondingly, the taxation powers are also broadly divided between the centre and states (Table 1). State legislatures may devolve some of their taxation powers to local bodies.
The centre collects majority of the tax revenue as it enjoys scale economies in the collection of certain taxes. States have the responsibility of delivering public goods in their areas due to their proximity to local issues and needs.
Sometimes, this leads to states incurring expenditures higher than the revenue generated by them. Further, due to vast regional disparities some states are unable to raise adequate resources as compared to others. To address these imbalances, the Finance Commission recommends the extent of central funds to be shared with states. Prior to 2000, only revenue income tax and union excise duty on certain goods was shared by the centre with states. A Constitution amendment in 2000 allowed for all central taxes to be shared with states.
Several other federal countries, such as Pakistan, Malaysia, and Australia have similar bodies which recommend the manner in which central funds will be shared with states.
Tax devolution to states
The 14th Finance Commission considerably increased the devolution of taxes from the centre to states from 32% to 42%. The Commission had recommended that tax devolution should be the primary source of transfer of funds to states. This would increase the flow of unconditional transfers and give states more flexibility in their spending.
The share in central taxes is distributed among states based on a formula. Previous Finance Commissions have considered various factors to determine the criteria such as the population and income needs of states, their area and infrastructure, etc. Further, the weightage assigned to each criterion has varied with each Finance Commission.
The criteria used by the 11th to 14thFinance Commissions are given in Table 2, along with the weight assigned to them. State level details of the criteria used by the 14th Finance Commission are given in Table 3.
Grants-in-Aid
Besides the taxes devolved to states, another source of transfers from the centre to states is grants-in-aid. As per the recommendations of the 14th Finance Commission, grants-in-aid constitute 12% of the central transfers to states. The 14th Finance Commission had recommended grants to states for three purposes: (i) disaster relief, (ii) local bodies, and (iii) revenue deficit.
