Page 447 - ES 2020-21_Volume-1-2 [28-01-21]

74 Economic Survey 2020-21 Volume 2

Transfer to States

2.37 The Central Government has accepted the recommendations made by the Fifteenth Finance
Commission (FC-XV) in its Report for financial year 2020-21, relating to the Post Devolution
Revenue Deficit Grant, Grants to Local bodies and Disaster Management Grants for the financial
year 2020-21. FC-XV recommended Grant-in-Aid amounting to ` 1.99 lakh crore for transfer to
States during 2020-21 for Post Devolution Revenue Deficit Grant, Grants to Local bodies and
Disaster Management Grants which is approximately 50% higher than recommended by the
FC-XIV for the award year 2019-20 (Table 9).

2.38 Out of the corpus of ` 90,000 crore allocated as grant for local bodies in the year 2020-21,
32.5 per cent have been recommended for urban local bodies and the remaining for rural local
bodies. Unlike that of the FC-XIV recommended grants, the local bodies grant during the year
2020-21 were also allocated to Fifth and Sixth Schedule Area as well as Mandal/Tehsil and
District/Zila Panchayats in case of rural local bodies, and also allocated to fifty-nine Cantonment
Boards in case of the urban local bodies. Moreover for the first time, Finance Commission
grants were also allocated for the purpose of improving ambient air quality in million plus cities/
urban agglomerations.

Table 9: Component-wise grants recommended during FC-XIV
(for year 2019-20 only) and FC-XV for the year 2020-21 (in ` crore)

Amount allocated for Amount allocated for
S. Component the year 2019-20 the year 2020-21
No.
(FC-XIV award period) (FC-XV award period)
(1) (2) (3) (4)
i Post-Devolution Revenue Deficit Grant 34,206 74,340
ii Local Bodies Grant 87,352 90,000
iii Disaster Management Grant (Union share) 12,120 34,574
Total 1,33,678 1,98,914
Source: Department of Expenditure

2.39 Due to a decline in the Gross Tax Revenue collections during 2019-20, a moderation in the
states’ share in Central taxes is seen in 2019-20 RE relative to 2018-19 (Table 10). The Budget
2020-21 envisaged a rebound in the total transfers to States from 5.7 per cent of GDP in 2019-20
RE to 6 per cent of GDP in 2020-21 BE.

Table 10: Transfers to States (in ` lakh crore)

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20 RE 2020-21 BE

Devolution of States' share
in Taxes 5.06 6.08 6.73 7.61 6.56 7.84

Finance Commission Grants 0.85 0.96 0.92 0.94 1.24 1.50
CSS and Other Transfers 2.39 2.77 3.16 3.32 3.80 4.09
Total transfers to States 8.29 9.81 10.81 11.87 11.60 13.43
Source: Union Budget Documents
BE: Budget Estimates, RE: Revised Estimates
Note: States includes all the States.