The Centre currently contributes 75%, while the states pitch in with 25% for elementary education schemes. The Prime Minister, however, has now directed the HRD ministry to draw up a Cabinet draft proposal, which would reduce the Centres contribution to 50%. The HRD ministry will have to do this in consultation with finance minister P Chidambaram and deputy chairman of Planning Commission Montek Singh Ahluwalia and implement it from the very first year of the 11th plan.
The HRD ministry had earlier proposed a gradual reduction of the Central funding, which was 75:25 to a 65:35 ratio.
The Prime Minister, in a letter to HRD minister Arjun Singh, a copy of which is with FE, has said, The tapering formula devised by the ministry involves heavy loading of SSA expenditure to the extent of additional Rs 5,000 crore (Rs 15,600 crore under 65:35 ratio) as against Rs 10,671 crore under 50:50 ratio, adding that this involves higher cost and is not aligning with the funding norms followed by the ministry of finance for the programme.
Explaining further the letter said, the allocation for 2007-08 should maintain a base budgetary support for 2006-07 and the cess accruals should be additional. The 2% education cess amount should be exhausted in SSA and mid-day-meal (MDM) allocations and should be distributed in the ratio of 2/3:1/3 respectively. The allocation of Rs 10,671 crore fully met the finance ministry norms, which was applied at the time of finalising the base estimate for the year 2007-08, it added.
Earlier in its brief to the Prime Minister the finance ministry argued that there was very little scope for finding additional funds. The ministry had said, We have increased the allocation for MDM from Rs 5,348 crore in 2006-07 to Rs 7,324 crore for 2007-08 in view of the expanding the programme to upper-primary schools.
Similarly rejecting the requests of a few of the poor states to adopt a differential funding pattern to met their special requirements, the finance ministry had argued that this could not be adopted as never in the history of any national programmes such leverages were accorded to any state.