Summary

• Union Minister of Finance and Corporate Affairs Nirmala Sitharaman presented the first ever digital Union Budget for 2021-22.
• The key highlights of the Union Budget 2021-22 are as follows:

 6 pillars of the Union Budget 2021-22:

1. Health and Wellbeing
2. Physical & Financial Capital, and Infrastructure
3. Inclusive Development for Aspirational India
4. Reinvigorating Human Capital
5. Innovation and R&D
6. Minimum Government and Maximum Governance

1. Health and Wellbeing

• The Finance Minister said the government is expected to spend ₹2,23,846 crore in the coming year on health and well being which is a 137% increase compared to the budgeted spending in 2020-21. 
• This includes a ₹60,030 crore outlay on drinking water and sanitation, a ₹2,700 crore outlay on nutrition — both of these are handled by separate ministries — nearly ₹49,000 crore as Finance Commission grants and ₹35,000 crore toward vaccination.
• The budget also records a new centrally sponsored scheme called Pradhan Mantri Atmanirbhar Swasth Bharat Yojana, in addition to the National Health Mission, with an outlay of about Rs 64,180 crore over six years.
  • It is aimed at developing capacity at the primary, secondary and tertiary healthcare levels, strengthening existing institutions and creating new ones, specifically to detect and cure emerging diseases.
  • This scheme aims to support 17,788 rural and 11,024 urban Health and Wellness Centers, establish integrated public health labs in all districts, strengthen the National Centre for Disease Control (NCDC) and 20 metropolitan health surveillance units, establish nine Bio-Safety Level III laboratories and four regional National Institutes of Virology.

• The Made-in-India Pneumococcal Vaccine is to be rolled out across the country, from present 5 states – to avert 50,000 child deaths annually.
  • The Pneumococcal vaccine targets the pneumococcal bacterium, which causes pneumonia and other serious life-threatening diseases such as meningitis and sepsis, and is estimated to cause nearly four lakh deaths in children under five years of age each year worldwide. 

• The supplementary nutrition programme and the Poshan Abhiyaan under the Women and Child Development Ministry have been merged to launch Mission Poshan 2.0 to strengthen nutritional content, delivery, outreach, and outcome.
  • Mission Poshan 2.0, prioritizing 112 aspirational districts, will focus on overall health-wellbeing of the beneficiary and integrated approach in the delivery of nutrition services will reinforce the fight against malnutrition. 
  • Poshan 2.0 scheme is an umbrella scheme covering the Integrated Child Development Services (ICDS), Anganwadi Services, Poshan Abhiyaan, Scheme For Adolescent Girls and National Creche Scheme.
  • Healthcare experts and NGOs have welcomed the launch of Poshan Mission 2.0, saying it will help tackle the complex issue of malnutrition which is dependent upon various factors.

• The Finance Minister also announced the Jal Jeevan Mission (Urban) to bring safe water to 2.86 crore households through tap connection by 2024. This in line with the Centre’s rural water supply project- Jal Jeevan Mission (Rural)- launched in 2019.
  • The project will focus on rejuvenation of water bodies to augment sustainable fresh water supply and creating green spaces and sponge cities to reduce floods and enhance amenity value through an Urban Aquifer Management plan.
  • JJM(U) will promote circular economy of water through development of a city water balance plan for each city focusing on recycle/reuse of treated sewage, rejuvenation of water bodies and water conservation. 20% of water demand to be met by reused water with development of institutional mechanisms.
• Unveiling Urban Swachh Bharat Mission 2.0, Finance Minister stressed on further strengthening of the ‘swachhata’ (cleanliness) campaign of urban India and allocated the budget of Rs. 1.41 lakh crore, which will be implemented over five years from 2021. 
  • The government intends to focus on complete faecal sludge management and wastewater treatment, source segregation of garbage, reduction in single-use plastic, reduction in air pollution, especially waste from construction and demolition, and bio-remediation of dumpsites.
• Ms Sitharaman also announced the voluntary vehicle scrapping policy to phase out old and polluting vehicles.
  • The new policy will allow owners to scrap their 20-year old vehicles and avail incentives on the purchase of new personal vehicles. For commercial vehicles, the scrappage policy will be applicable for 15-year old commercial vehicles without a fitness certificate.
  • The policy would cover an estimated 51 lakh light motor vehicles (LMVs) that are above 20 years of age, while another 34 lakh LMVs are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates. These vehicles are estimated to cause 10-12 times more pollution than the latest vehicles.
  • It would lead to recycling of waste metal, improved safety, reduction in air pollution, lower oil imports due to greater fuel efficiency of current vehicles, and stimulate investment. 

2. Physical and Financial Capital and Infrastructure

• The Budget has imposed an agriculture infrastructure and development cess (AIDC) on specified goods including alcoholic beverages, gold, silver, cotton, peas, apple, petrol, and diesel. 
  • The proceeds from the cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure.
  • The AIDC is least (1.5%) for coal and most (100%) for imported liquor. The customs duty for the goods covered under AIDC have been rationalised to ensure the consumer doesn’t bear the additional burden on most of these items.
  • This has been done to make sure that there is a dedicated amount coming out to the Budget to improve agricultural infrastructure.
• The government has proposed to link 1,000 more mandis into the e-NAM system in view of the transparency and competitiveness the electronic marketing system has brought into agriculture trade. 
  • At present there are about 7,000 mandis in the country with about 5,000 of them being small and medium ones. The rest are either large or medium ones. 
  • Around 1,000 APMCs are currently on the eNAM platform.
• The government announced that the Production Linked Incentive scheme (PLI) implemented to boost manufacturing within India, will now cover a total of 13 sectors with an outlay of ₹1.97 lakh crore over five years, starting financial year 2021-22.
  • This will be an addition to the ₹40,951 crore announced for the PLI for electronic manufacturing schemes. This will be a major step ahead in making India a hub for manufacturing and exports. 
  • Under the scheme, eligible players will receive incentives ranging from 4 per cent to 6 per cent of production value for five years, after they achieve their investment and production value target for each year.
• India will set up seven Mega Integrated Textile Region and Apparel (MITRA) parks over three years to position India as a fully integrated, globally competitive manufacturing and exporting hub.
  • The parks to be setup over 1,000 acres of land with world class infrastructure, and plug-and-play facilities, will be in addition to the PLI scheme for technical textiles and manmade fibre.
  • It aims to double the industry size to $300 billion by 2025-26. The parks are targeted to have uninterrupted water and power supply, common utilities and research and development labs.
  • Similar parks already exist in China, Vietnam and Ethiopia where the entire textiles value chain is covered.
  • India has already sanctioned 59 textile parks under the Scheme for Integrated Textile Parks (SITP), of which 22 have been completed. However, their slow progress due to delays in obtaining land and other statutory clearances from state governments and tardy fund mobilisation, have prompted the government to develop MITRA parks.

• • The National Infrastructure Pipeline (NIP), which was launched with 6,835 projects, has now expanded to 7,400 projects in an effort to shore up economic growth as the nation recovers from the pandemic-induced recession.
    • The programme will require an increase in funding from the government as well as the financial sector. For this, the government is proposing to take three concrete steps:
      • Creating institutional structure
      • Big thrust on monetisation of assets
      • Enhancing share of capital expenditure in central and state budget
    • Building new roads, rail links and other social and economic infrastructure is key for attracting investments and making India a $5-trillion economy. 
    • NIP, launched in 2019, envisages an investment of Rs 111 lakh crore on infrastructure projects by the year 2024-25. So far, around 217 projects worth Rs 1.10 lakh crore under some key infrastructure ministries have been completed.
    • The NIP—jointly funded by the central government (39%), state government (40%) and the private sector (21%)—aims to invest in projects spanning across sectors such as energy, social and commercial infrastructure, communication, water and sanitation.
  • The Finance Minister announced setting up of a Development Finance Institution (DFI) with a view to mobilise Rs 111 lakh crore required for funding of the ambitious national infrastructure pipeline.
    • Infrastructure needs long-term debt financing. A professionally managed development financial institution is necessary to act as provider, enabler and catalyst for infrastructure financing.
    • A Bill to set up the DFI — which will be capitalised with Rs 20,000 crore — will be introduced in the ongoing session of Parliament. 
  • Ms Sitharaman also announced a ‘National Monetisation Pipeline’ of potential brownfield infrastructure assets to raise finances for upcoming projects. For instance, railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning. The next lot of airports will be monetised for operations and management concession.
  • She also announced the launch of a new scheme to support augmentation of public bus transport services, at a cost of Rs 18,000 crore. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses.
  • Besides, two new technologies — ‘MetroLite’ and ‘MetroNeo’ — will be deployed to provide metro rail systems at much lower cost with the same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.
  • The Finance Minister announced that the National Hydrogen Energy Mission will be launched in 2021-22 for generating hydrogen from green power sources.
    • The Hydrogen Mission is not only essential to decarbonise heavy industries like steel and cement, it also holds the key to clean electric mobility that doesn’t depend on rare-earth element-based batteries as energy storage.
  • Seven major ports worth ₹2,000 crore will see their operations privatised in the year 2021-2022.
    • India has 12 major ports — Deendayal (erstwhile Kandla), Mumbai, JNPT, Mormugao, New Mangalore, Cochin, Chennai, Kamarajar (earlier Ennore), V O Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia) under the control of the Centre. 
    • These major ports handle about 60% of the country’s total cargo traffic.
  • The Budget also envisages boosting the recycling of ships at Alang in Gujarat, the world’s biggest shipyard. The Minister said the capacity of recycling shipyards would be doubled from 4.5 million light displacement tonne by 2024, which will generate 1.5 lakh jobs.
    • India has enacted Recycling of Ships Act, 2019 and acceded to the Hong Kong International Convention (HKC). Post-enactment of the law, around 90 ship recycling yards at Alang in Gujarat have already achieved HKC-compliant certificates.
    • India aspires to grab at least 50 per cent of the global ship recycling business. The country’s share in the ship recycling business is around 30% at present.
  • Ujjwala Scheme under which 8 crore poor households were provided free cooking gas connection will be extended to cover 1 crore more beneficiaries.
  • Also, 100 more districts will be added in the next 3 years to the City Gas Distribution network.
  • The Budget proposed to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49 per cent to 74 per cent in insurance companies and allow foreign ownership and control with safeguards.
    • A liberal FDI policy will attract higher amounts of foreign capital, which will aid in increasing insurance penetration in India. 
    • Life insurance penetration in the country is 3.6 per cent of the GDP, way below the global average of 7.13 per cent, and in case of general insurance, it is even worse at 0.94 per cent of GDP, as against the world average of 2.88 per cent.
    • The government has earlier allowed 100 per cent foreign direct investment in insurance intermediaries.
    • Intermediary services include insurance brokers, reinsurance brokers, insurance consultants, corporate agents, third party administrators, surveyors and loss assessors.
  • The Finance Minister proposed setting up an asset reconstruction company to clean up non-performing assets in the banking sector.

• Refer “Can a ‘bad bank’ solve the growing NPA crisis?” topic

• Budget 2021 has proposed to amend the Deposit Insurance and Credit Guarantee Corporation Act, 1961, (DICGC Act), to allow them to get funds if a bank is unable to fulfil its obligations.
  • Keeping the interest of depositors in mind, the government had increased the deposit insurance cover from ₹1 lakh to ₹5 lakh last year. However, the claim could be made only in dire situations—if a bank’s licence was cancelled and its liquidation proceedings were started.
  • With the amendments to the DICGC Act, it should be possible for depositors to withdraw funds of up to ₹5 lakh even if the bank is under stress. 

• To improve credit discipline while continuing to protect the interest of small borrowers, the Budget proposed to reduce the minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 from Rs. 50 lakh to Rs. 20 lakh for NBFCs with minimum asset size of Rs.  100 crore.
  • The SARFAESI Act was passed in 2002 to lay down processes to help Indian lenders recover their dues quickly. The Act essentially empowers banks and other financial institutions to directly auction residential or commercial properties that have been pledged with them to recover loans from borrowers. 
  • Before this Act took effect, financial institutions had to take recourse to civil suits in the courts to recover their dues, which is a lengthy and time-consuming process.
• The Finance Minister proposed revising the definition of small companies by enhancing the paid-up capital base from the existing limit of Rs 50 lakh to Rs 2 crore. The turnover threshold is also proposed to be enhanced from Rs 2 crore to Rs 20 crore.
  • The move is likely to get more companies under the ‘small’ category and benefit them in terms of the compliance requirements under Companies Act 2013.
• The Budget incentivizes the incorporation of One Person Companies (OPCs) by amending the Companies (Incorporation) Rules to allow OPCs to grow without any restrictions on paid-up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non-Resident Indians (NRIs) to incorporate OPCs in India.
  • These measures will help a number of overseas Indians establish businesses in India and benefit Startups and Innovators in the country.
• The Ministry of Corporate Affairs (MCA) will launch data analytics-driven MCA 21 Version 3.0 during fiscal 2021-22 with additional modules for e-Adjudication, e-Consultation, and Compliance Management.
  • Aligned with global best practices and aided by emerging technologies such as Artificial Intelligence, data analytics and machine learning, MCA 21 3.0 is envisioned to transform the corporate regulatory environment in India.
  • MCA-21 is an initiative under the Ministry of Corporate Affairs storing all registered companies that file accounts online with MCA. It enables an easy and secure access of the MCA services to the corporate entities, professionals and citizens of India.
• The government budgeted a disinvestment target of ₹1.75 lakh crore for the next fiscal year beginning April 1.
  • The amount is lower than the record ₹2.10 lakh crore which was budgeted to be raised from CPSE disinvestment in the current fiscal year. However, the COVID-19 pandemic impacted the government’s CPSE stake sale programme, and the target has been lowered to ₹32,000 crore in the Revised Estimates.
  • For fiscal year 2021-22, out of the total ₹1.75 lakh crore, ₹1 lakh crore is to come from selling government stake in public sector banks and financial institutions, including 2 PSU banks and one insurance company. About ₹75,000 crore would come as CPSE disinvestment receipts.
  • The Finance Minister Nirmala said four sectors — Atomic energy, Space and Defence; Transport and Telecommunications; Power, Petroleum, Coal and other minerals; and Banking, Insurance and financial services — would be strategic sectors.
  • In strategic sectors, there will be bare minimum presence of the public sector enterprises. The remaining CPSEs in the strategic sectors will be privatised or merged or subsidiarised with other CPSEs or closed. In non-strategic sectors, CPSEs will be privatised, otherwise shall be closed.
  • Strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Ltd, among others would be completed in 2021-22.
  • Also the legislative amendments required for launching the Initial Public Offering (IPO) of the Life Insurance Corporation of India (LIC) would be brought in the ongoing session of Parliament.
  • To fast-track the disinvestment policy, NITI Aayog would work out on the next list of central public sector companies that would be taken up for strategic disinvestment.
  • To monetise lands owned by CPSEs, a special purpose vehicle (SPV) would be developed.
  • Besides, to ensure timely completion of closure of sick or loss making CPSEs, a revised mechanism would be brought in.

3. Inclusive Development for Aspirational India

• The SWAMITVA Scheme is to be extended to all States/UTs.
  • SVAMITVA (Survey of villages and mapping with improvised technology in village areas) scheme is a collaborative effort of the Ministry of Panchayati Raj, State Panchayati Raj Departments, State Revenue Departments and Survey of India.
  • It aims to provide rural people with the right to document their residential properties so that they can use their property for economic purposes. The scheme is for surveying the land parcels in rural inhabited areas using Drone technology. 
  • Last year, the government approved the pilot phase which covers six States (Haryana, Karnataka, Madhya Pradesh, Maharashtra, Uttar Pradesh and Uttarakhand).  
  • 1.80 lakh property-owners in 1,241 villages have already been provided cards.
• The Budget envisages expanding ‘Operation Green Scheme’, currently applicable for Tomato, Onion and Potato value chains, to 22 more perishable products to encourage value addition in agriculture and allied products.
  • Announced for the first time in 2018-19 budget with an outlay of ₹500 crore, the Operation Greens scheme, on the lines of Operation Flood, was aimed at stabilizing the supply of Tomato, Onion and Potato (TOP) crops and to ensure availability of TOP crops throughout the country round the year without price volatility.
  • It aimed at promoting farmer producer organisation, strengthening agri-logistics, processing facilities and professional management. 
  • Operations Greens is focussed on organised marketing of tomatoes, onions and potatoes by connecting farmers with consumers. 
• Also, to protect the farmers from cheaper imports, Ms Sitaraman has announced the increase in customs duty on products such as cotton, raw silk and silk yarn. Cotton will attract customs duty of 10 per cent, while the levy on raw silk and silk yarn has been increased from 10 to 15 per cent.
• Further, to strengthen the post-harvest facilities, the Finance Minister announced that the Agriculture Infrastructure Fund, announced in the aftermath of the COVID Pandemic lockdown last year, would be made available for the Agriculture Produce Marketing Committee mandis to augment their infrastructure.
• Five major fishing harbours — Kochi, Chennai, Visakhapatnam, Paradip and Petuaghat — will be developed as hubs of economic activity. They will see substantial investments for modernisation and development.
• To promote seaweed cultivation, the Budget proposed a Multipurpose Seaweed Park to be established in Tamil Nadu. Seaweed farming is an emerging sector with potential to transform the lives of coastal communities. It will provide large scale employment and additional incomes.
• The government said social security benefits will be extended to platform and gig workers. The government also proposed setting up a portal to collect information on gig-workers, building and construction workers, among others, to provide them benefits like health, credit (easy financing), food and others.
  • The gig and platform workers are those who are engaged by various e-commerce businesses like UBER, OLA, SWIGGY and Zomato. These workers are not paid salaries and hence deprived of social security benefits like provident fund, group insurance and pension.
  • India has a total workforce of over 50 crore including 40 crore unorganised sector which include farm and rural workers.
• To further facilitate credit flow under the scheme of Stand Up India for SCs, STs, and women, the  Finance Minister proposed to reduce the margin money requirement from 25% to 15%, and to also include loans for activities allied to agriculture. 
  • Stand Up India scheme facilitates loans between 10 lakh and 1 crore to at least one scheduled caste/scheduled tribe and one woman per bank branch for setting up a greenfield enterprise (manufacturing, services or the trading sector). 
  • In case of non-individual enterprises, at least 51 per cent of the shareholding and controlling stake should be held by either an SC/ST or woman entrepreneur.
• More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy (NEP). They shall emerge as exemplar schools in their regions, handholding and mentoring other schools to achieve the ideals of the policy.
• A total of 100 new Sainik Schools will be set up in partnership with NGOs, private schools and states. 
  • There are 30 Sainik Schools in India at present, established and managed by Sainik Schools Society under the Ministry of Defence. These schools are supported by the Central and State government and act as feeder institutions to the National Defence Academy (NDA). 
• A total of 750 Eklavya Model Residential Schools (EMRSs) will be established in tribal areas. 
  • The Ministry of Tribal Affairs has been setting up EMRSs since 1998-99 for imparting quality education to tribal children in their own environment. The objective of EMRSs is to provide quality middle and high level education to Scheduled Tribe (ST) students in remote areas. 
  • As per the budget 2018-19, every block with more than 50% ST population and at least 20,000 tribal persons, will have an Eklavya Model Residential School by the year 2022.
• Standards will be developed for all school teachers in the form of National Professional Standards for Teachers (NPST). This will enhance the capabilities of teachers and will be followed by all 92 lakh teachers of public and private school system in the country.
• During the year, despite COVID-19 pandemic, the government trained more than 30 lakh elementary school teachers digitally, covering the whole gamut of education. Taking this further, in 2021-22, the government will enable the training of 56 lakh school teachers through the National Initiative for School Heads and Teachers for Holistic Advancement (NISTHA).
  • NISHTHA is a national initiative for school heads and teachers’ holistic advancement. It was launched in 2019 by the Ministry of Education.
  • The aim of this training is to motivate and equip teachers to encourage and foster critical thinking in students, handle diverse situations and act as first level counsellors.

• Rs. 3000 crore has been allocated for realignment of existing National Apprenticeship Training Scheme (NATS) towards post-education apprenticeship, training of graduates and diploma holders in Engineering.

5. Innovation and R&D

• Modalities are being worked out for a National Research Foundation for which Rs 50,000 crore has been earmarked over five years to strengthen the overall research ecosystem with focus on national-priority thrust areas.
• National Language Translation Mission (NLTM) — a new initiative is being introduced to make policy and government documents available in major Indian languages. 
  • The Mission will work towards creating a “voice-based internet” using artificial intelligence, machine learning and speech recognition technologies which will be accessible in popular Indian languages and not be dominated by Hindi or English. 
  • This is in line with the National Education Policy 2020, which emphasises creating content and delivery of content in regional languages.

• Finance Minister announced an allocation of over Rs 4,000 crore over the next five years for the Deep Ocean Mission aimed at improving understanding about oceans, its biodiversity and impact of climate change, along with development and demonstration of technology to undertake future ocean explorations.
  • The Deep Ocean Mission, which is part of the Blue Economy envisioned to be developed by 2030, will place India among select countries — US, France, Japan, Russia and China — to have special missions dedicated for ocean studies.
  • The mission will be spearheaded by the Ministry of Earth Sciences (MoES) in collaboration with an UN organisation for mineral exploration. 

6. Minimum Government, Maximum Governance

• In the spirit of Prime Minister Narendra Modi’s vision for “Minimum Government, Maximum Governance”, a number of steps were taken to bring reforms in Central Administrative Tribunals (CATs) in the last few years for speedy delivery of justice and the budget proposes to take further measures to rationalise the functioning of tribunals.
• The Budget proposes to set up a conciliation mechanism and mandate its use for quick resolution of contractual disputes with CPSEs to instil confidence in private investors and contractors. 

Fiscal Position

• Finance Minister Nirmala Sitharaman has pegged fiscal deficit for the coming year 2021-22 at 6.8% of GDP and aims to bring it back below the 4.5% mark by 2025-26.
  • The original fiscal deficit target for 2020-21 was 3.5%. However, in reality, the deficit shot up to a high of 9.5% of GDP due to the double impact of the COVID-19 pandemic — low revenue flows due to the lockdown and negative economic growth clubbed with high government spending to provide essential relief to vulnerable sections of society, as well as a stimulus package aimed at reviving domestic demand.
  • The Centre proposes to make amendments to the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, to reflect these changes to the fiscal consolidation roadmap.
  • She added that the Centre hopes to return to the path of fiscal consolidation by higher tax buoyancy through improved compliance on the one hand, and increased monetisation of its assets, including Public Sector Enterprises and land, on the other hand. 
  • This year’s fiscal deficit has been funded through government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings.
• In 2021-22, the government proposes to spend a total of ₹34.83 lakh crore, higher than the budget estimate of ₹30.42 lakh crore in the previous year, as well as the actual expenditure of ₹34.5 lakh crore. 
  • The coming year’s spending plan includes ₹5.54 lakh crore as capital expenditure, an increase of 34.5% over the current year’s budget estimates. 
• She also proposed to augment the Contingency Fund of India from ₹500 crore to ₹30,000 crore.

Finance Commission recommendations

• The government has accepted the Fifteenth Finance Commission’s recommendation to maintain the States’ share in the divisible pool of taxes to 41% for the five-year period starting 2021-22, and given an ‘in-principle’ nod to the panel’s suggestion to set up a separate non-lapsable fund for defence and internal security modernisation.
• The Fourteenth Finance Commission had raised States’ share to 42% of divisible revenues, but the Fifteenth Finance panel, headed by N.K. Singh, had reduced the share to 41% in its interim report for 2020-21, citing the conversion of Jammu, Kashmir and Ladakh into Union Territories.
• The Commission’s report, which was submitted to the President in November but tabled in Parliament recently with the government’s action taken report on its suggestions, has recommended additional revenue deficit grants of ₹2.94 lakh crore for 17 States over the next five years. 
• States are being allowed a net borrowing ceiling of 4% of GSDP in 2021-22, and will be expected to consolidate their fiscal deficits to 3% of GSDP by 2023-24, as recommended by the Fifteenth Finance Commission.
• An additional borrowing ceiling of 0.5% of GSDP will also be provided based on meeting specified reforms in the power sector. 
• The Commission has sought to assuage the fears of southern States about losing some share in tax transfers due to the reliance on the 2011 Census data instead of the 1971 census, which could penalise States that did better on managing demographics. It has done so by giving a 12.5% weightage for demographic performance in its tax-transfer calculations.