‘Power’ tussle: Jharkhand CM Soren calls Centre’s move to debit Rs 1417 Cr through RBI a ‘veiled conspiracy’
The Union Power Ministry has recovered Rs 1417.50 crores -- as the first instalment of the outstanding dues for power supplies -- from the Jharkhand government’s account maintained with the RBI. The Centre’s unilateral decision has left CM Hemant Soren fuming. Interestingly, the outstanding bill of thousands of crores for the power supply was left behind as a legacy by the erstwhile Raghubar Das-led BJP government.
The rifts between the Narendra Modi-led Central government and the Hemant Soren-led Jharkhand government could soon gain momentum. Right after the COVID-19 triggered lockdown was imposed, the Jharkhand government had started to mount pressure on the Centre to provide a consolidated financial package to state governments so that they could tackle the crisis at hand. Soren was among those Chief Ministers who were vocal about issues with the Bharatiya Janata Party (BJP) government and had asked them to clear the arrears and dues. The rifts widened with the tussle over the GST dues and compensation. And the Soren government’s tough stance and legal battle against the Centre’s proposed amendments in the mining laws further soured the relations.
And now, the Union Power Ministry’s move to ask the Reserve Bank of India (RBI) to debit Rs 1417.50 crores from the Jharkhand government’s account has left the Chief Minister fuming.
“Cooperative federalism seems to be yet another failed slogan of the Central government,” he said, while referring to attempts of the Union Power Ministry to recover the dues through RBI.
In a letter dating October 12, the Union Power Ministry urged the RBI to deduct the amount from the Jharkhand government’s account. It said that the state government’s electricity distribution company (DISCOM) has failed to pay the dues amounting Rs 5,608 crore to the power supplier - Damodar Valley Corporation.
The Union Power Ministry invoked the provisions of the Tripartite Agreement (TPA) signed between the Centre, the Jharkhand government and the RBI, in April 2017, to make the recovery of the dues. It asked the RBI to debit the said amount from the Jharkhand government’s account and credit it to the Power Ministry’s account so that it can give forward the money to the DVC.
The move came as a shock to the Jharkhand Mukti Morcha (JMM) led state government. Mostly because the state’s Principal Secretary, in a written response on 25 September, had assured the Centre that Jharkhand intends to clear the dues. However, he had shown an inability to do so right away due to the peculiar financial crisis triggered by the pandemic.
Moreover, Jharkhand Principal Secretary Avinash Kumar had apprised the Union Power Ministry Secretary about the agreement between the power supplier and the state’s DISCOM in March this year.
The Jharkhand Bijlee Vitran Nigam Limited (JBVNL) had agreed to pay the running bill on a monthly basis from March. It had also claimed that the DISCOM would seek the state government’s approval to clear the outstanding dues in 24 equal instalments, as proposed by the DVC.
Despite Kumar's written assurance to the Union Power Ministry, the Centre invoked the provisions of the TPA. It went ahead to deduct money from the non-BJP governed state’s account with the RBI.
According to the sources at the Chief Minister’s Office (CMO), the debit of Rs 1417.50 crore, which served as the first instalment of the dues, was made on October 15.
BJP-led state government signed the TPA, left huge dues behind
According to the minutes of the meeting (MoM) held on 14 March 2020 between the DVC and JBVNL, the outstanding dues were from October 2015 and Jan 2020. The total outstanding amount, as per the DVC, was Rs 5393 crore. However, the JBVNL had claimed that the dues for the said period were Rs 3014 crore. The matter of the disputed outstanding is pending with the Appellate Tribunal for Electricity (APTEL).
It is important to note the timeline of the outstanding dues which led to the invocation of the TPA’s provisions by the Union Power Ministry.
The BJP came to power in Jharkhand in December 2014 and Raghubar Das took charge of the CM’s office. In December 2019, the BJP faced an electoral drubbing at hands of the JMM-led Grand Alliance. Das, who is now a BJP national vice president, registered a humiliating defeat in his own constituency.
The Das-led BJP government left behind this multi-thousand crores power supply dues for the newly elected Grand Alliance government.
Moreover, it was then CM Das who had signed the TPA in 2017, empowering the Centre for such direct deductions from the state government’s account. And barely ten months after the BJP was ousted from power, the Union government accelerated the process of recovery of dues piled up during the Raghubar Das government’s tenure.
“The previous BJP ruled Raghubar Das-led government in Jharkhand through the TPA signed in 2017 laid the foundation stone towards destroying the basic edifice of cooperative federalism,” Jharkhand CM Hemant Soren said in a strongly-worded statement.
“I express my complete anguish and disappointment at this blatant continuous attempt by the Central Government to impose fiscal penalties on Jharkhand,” the Chief Minister said. “It is a veiled conspiracy by the Union Government to provoke and trap the State Government to increase its borrowing from markets and other instruments in these times of economic instability and fiscal difficulties being faced by the state.”
Importantly, the JBVNL was unable to repay the amount even after the March agreement with the DVC due to the steep decline in its revenue. Kumar, in his letter to the Union Power Ministry, had claimed that the spread of COVID-19 and the imposition of lockdown had negatively impacted its revenue and “aggravated its already weak financial position”.
The Jharkhand Secretary had further said the JBVNL has proposed to avail the loan of Rs 1,841 crore package under the Centre’s Atma Nirbhar Bharat package.
However, these arguments were sidelined by the Union Power Ministry and it went ahead with the first deduction of Rs 1417.50 crores.
“Historically unilateral use of power by the Government of India”
In order to recover the outstanding dues, the Union Power Ministry invoked clause 7.3 of the TPA signed by the Das government. Under this clause, the erstwhile BJP-led Jharkhand government had “irrevocably and unconditionally” authorised the Centre to “instruct the RBI to debit” the outstanding amount from its account maintained with India’s central bank.
The clauses of this TPA gave rights to the Centre for such deductions in case the amount is outstanding till 90 days after the billing.
Not only has the decision to use the provision of the TPA but also the timing of such invocation irked the JMM-led Jharkhand government. The Jharkhand CMO sources told Asiaville, “It's a unilateral use of power by the GoI. Possibly, the second time ever. The provisions of the TPA were never used in case of Jharkhand.” The source further added that the previous government could have avoided such a handover of power to the Centre.
Importantly, the deduction comes at a time when the state government is already struggling to manage its finances due to the sharp decline in the revenue triggered by the pandemic. As per the Jharkhand CMO sources, the state had demanded Rs 3,300 crore as GST compensation. However, reportedly, it has received a meagre amount of Rs 318 crores.
“The Union government has been visibly reluctant to pay the long-standing GST compensation dues with States stating COVID 19 pandemic and its subsequent impact on revenues. But it is leaving no stone unturned to ensure auto deduction of thousands of crores from the state,” Jharkhand CM had said commenting on the development.
Dues worth thousands of crores were piled up in four years during the BJP-led state government. The TPA empowering the Centre to deduct money from the state government’s account was signed by a BJP Chief Minister. And the recovery - the first instalment of the outstanding –has been directly made from the state’s account when a non-BJP government is in power in the state.