With the states getting a higher share in the central taxes and more untied funds, the government has decided to reduce the centrally sponsored schemes (CSS) to 27 from 72, a move likely to result in the states picking up a higher tab on these schemes. Of the 27 CSS, the Centre would fully fund ten and provide 60% of the funds for the 17 others.
The restructuring of the schemes is largely based on the recommendations of a Niti Aayog panel of chief ministers headed by Madhya Pradesh CM Shivraj Singh Chouhan, which submitted its report to Prime Minister Narendra Modi on October 27. With some schemes merged with others, states have been given the option to continue any earlier schemes left out in the restructuring, in a sharing pattern of 50:50 between the Centre and states.
This change in funding pattern would be implemented from the current fiscal year and managed within the budgetary allocations, sources said.
Under the previous UPA regime, there were 147 central schemes which were cut down to just 66 in 2013. The number of CSS went up to 72 after the current NDA government added six new schemes.
According to sources, the Centre has decided to fully support programmes, which are targeted to the benefits of socially disadvantaged groups. These include: Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), National Social Assistance Programme (old age pension etc), umbrella programmes for the welfare of ST, SC, OBC, differently abled and minorities. Three central schemes related to national AIDS programme, national skill development programme and national disease surveillance system would be implemented from FY17.
The funding pattern will be 60:40 between the Centre and states for the following broad category of schemes (part of the national development agenda): Krishi Unnati Yojana, Rashtriya Krishi Vikas Yojana, Pradhan Mantri Krishi Sinchai Yojana, Rashtriya Pashudhan Vikas Yojana, Swachh Bharat Abhiyan, National Rural Drinking Water Programme, National Health Mission, National Education Mission, Integrated Child Development Service, Mid-Day Meal Yojana, Housing for All, National Livestock Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Smart Cities, Pradhan Mantri Gram Sadak Yojana, Forestry and Wild Life, Police Modernisation and Infrastructure of Judiciary. For north-eastern states and three Himalayan states, the funding ratio would be 90:10 between the Centre and the states.
Other optional schemes on social protection and inclusion, which are not covered under the 27 CSS, the states can continue with the central assistance capped at 50%. North-eastern states and Himalayan states would share only 20% in these schemes. As the funding of the Centre changes from 20-100% to at least 50% in the restructured schemes, the government would try to keep funding of the schemes from FY17 onwards keeping the FY16 Budget as a benchmark, sources said.
The 14th Finance Commission had recommended that the government increase the tax devolution to states to 42% from 32%; in FY16 this is estimated at Rs 5.2 lakh crore compared with R3.8 lakh crore in FY15.
This will be the primary route of transfer of resources from the Centre to the states and the funds will not be earmarked for any particular use. As a result, the CSS and central assistance to state plans as a whole to reduce but be more than compensated by a bigger devolution of taxes. In Budget FY16, an amount of Rs 1.9 lakh crore has been allocated as central assistance to states compared with Rs 3.3 lakh crore in FY15.