Finance Minister Nirmala Sitharaman said the Centre has increased borrowing limits for states to 5 percent from 3 percent for FY21.
She added that states were already allowed to borrow 75 percent of their authorised limit from March itself, of which only 14 percent has been borrowed. States net borrowing ceiling for FY21 is Rs 6.41 lakh crore, based on 3 percent of gross state domestic product (GSDP).
“Of this, 86 percent of authorised borrowing remains unutilised. Nevertheless, states have been asking for special increase in borrowing to 5 percent from 3 percent and we have allowed it only for FY21,” she stated.
“In view of the unprecedented situation, the Centre has decided to accede to the request. This will provide states extra resources of Rs 4.28 lakh crore,” she added.
She specified that the borrowings will be linked to specific reforms, which will include Finance Commission recommendations.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
“This is to ensure sustainability of the additional debt through higher future gross state domestic product (GSDP) growth and lower deficits; promote welfare of immigrants and reduce leakage in food distribution; increase job creation through investment safeguard the interests of farmers while making the power sector sustainable; and promote urban development, health and sanitation,” she enumerated.
The reform linkage will be in four areas — universalisation of 'One Nation One Ration card’, Ease of Doing Business, power distribution and urban local body revenues.
“A specific scheme will be notified by Department of Expenditure for this,” she added.
The Finance Minister explained that the first 0.50 percent (i.e 3.5 percent) will be given unconditional. After which, subsequent 1 percent (i.e. 4 percent) will be released in four tranches of 0.25 percent, each linked to “clear, specific, measurable and feasible reforms.”
And a further 0.50 (4.5 percent) percent if milestones in at least three out of four reforms are achieved.
Finance Minister Sitharaman on May 17 announced the fifth tranche and final tranche of the Rs 20 lakh crore financial package announced by Prime Minister Narendra Modi on May 12. The fifth tranche focuses on seven steps:- Health & education