In Indian federal structure the responsibilities of various layers of government are clearly delineated. However, in the areas requiring national effort, the Centre cannot but intervene catalytically to infuse greater dynamism.Government of India tries to do this through various programmes and polices including the CSS.
Central Government has introduced several schemes in areas that are national priority like health, education, agriculture, skill development, employment, urban development, rural infrastructure etc. Several of these sectors fall in the sphere of activity of States.
The State Governments’ suggestions on CSS in the NDC meetings also include (i) transferring the entire CSS funds to the States without any restrictions (ii) 100% funding of CSS with no counter-part State funds and (iii) flexibility in the implementation of these schemes.
In the initial Plan years, no. of CSS was very large (190 at the end of Fifth Plan which increased to 360 at the end of Ninth Plan). The total no. of CSS has reduced gradually over time. Further, generally the pattern has been reduction in the number of schemes at the end of the Plan after a review and subsequent increase in new schemes during the course of the Plan.
For example, in the Eleventh Plan, the number of schemes declined from 155 (2005-06) to 99 (2007-08) at the beginning of Eleventh Plan and subsequently increased to 147 (2011-12).
Transfer of funds to the States is taking place through CSS, ACA and normal Central Schemes. Of the total CSS provision of Rs.6,60,506.40 crore during the Eleventh Plan, the 9 Flagship CSS alone constituted Rs. 5,24,465.99 crore i.e. 79.4%.
The share of all CSS as percentage of GBS has increased continuously in the last three Plans. In the Eleventh Plan it went up to 41.59% as against 38.64% in Tenth Plan and 31% in Ninth Plan. However, there has been a decline in no. of CSS during the last three Plans to 360, 155 and to 147 respectively.
Normal Central assistance to States declined to 6.74% of the GBS during the Eleventh Plan. The sharp decline in the Eleventh Plan was partly due to fact that in earlier Plans assistance was given in the form of Central grants as well as loans, while in the Eleventh Plan only grants were given. Loans are now taken by the State Governments directly from the open market, after the Twelfth Finance Commission award.
Gaps In Design
Large funds are being transferred as ACA under JNNURM, RKVY, AIBP, R-APDRP and RGGVY (the last two operate as Central Sector schemes), which are considered Flagship Schemes of the Central Government.
These cover major areas of power, urban development, agriculture and irrigation. Total transfers under ACA/Central Sector (CS) Schemes in Eleventh Plan is estimated at Rs.2, 90,317.63 crore – i.e. 18.28% of the GBS. The current system of implementing ACA and CSS as separate category of schemes is artificial. Both are administered in the same manner.
The pattern of assistance for States under CSS varies from 100% to 90:10 for North-East States, 65:35 in SSA, 75:25 in IAY and 75:25 in a no. of other schemes. Rapid increase in CSS and need for counterpart funds has led to pre-empting of resources of State Government for their Plan priorities. In several cases, it has also led to difficulties in accessing CSS funds due to shortage of counter-part funds with a State.
Recommendations
The no. of CSS with small outlays does not achieve the objective of making an impact across the States. Such schemes are, therefore, not suitable as a CSS and need to be implemented by the States, unless required as part of convergence process of a broader scheme at the Centre.
44% of the total CSS have an average annual outlay of less than Rs.100 crore. These schemes should either be weeded out or merged for convergence with larger sectoral schemes or be transferred to States, who can then continue with these schemes based on their requirements.
The existing 147 CSS should be restructured into three categories: (a) Flagship Schemes which will address major national interventions required on education, health, irrigation, urban development infrastructure, rural infrastructure, skill development, employment and other identified sectors, (b) Major Sub-Sectoral Schemes to address developmental problems of sub-sectors of major sectors like Agriculture, Education and Health, and (c) Sector Umbrella Schemes, which will address the sectoral gaps to help improve effectiveness of Plan expenditure.
The total number of schemes can be reduced to 59 based on the above assessment of the Committee. The list of revised schemes is placed at Annexure-IV. All existing 9 Flagship CSS are being proposed for continuance after extensive review by Working Groups/Steering Committees with changes based on it, if any.
The total no. of schemes is proposed to be accordingly restructured into following categories:
(a) 9 Flagship CSS are being proposed for continuance after extensive review by Working Groups and changes suggested by Steering Committees which may be required in it. In addition NRLM is also being proposed as Flagship Scheme in view of its financial outlay, broad scope and objectives.
(b) 99 CSS are being proposed to be restructured into 39 CSS as Sub-Sectoral Schemes/Umbrella Schemes.
(c) 39 CSS are proposed to be restructured into 11 ACA/CSS schemes.
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