To reduce unnecessary expenditure, key govt panels may recalibrate central scheme | The Financial Express

To reduce unnecessary expenditure, key govt panels may recalibrate central scheme

Niti Aayog and PMEAC jointly reviewing central sector and centrally-sponsored schemes

To reduce unnecessary expenditure, key govt panels may recalibrate central scheme
There are about 740 central sector schemes (CS) and 50 centrally-sponsored schemes (CSS), which accounted for Rs 16.2 trillion or 41% of the FY23 Budget of Rs 39.4 trillion. (IE)

In order to reduce unnecessary expenditure, the Niti Aayog and the Economic Advisory Council to the Prime Minister are jointly reviewing all central sector and centrally-sponsored schemes, which account for 40-50% of the annual Budget.

There are about 740 central sector schemes (CS) and 50 centrally-sponsored schemes (CSS), which accounted for Rs 16.2 trillion or 41% of the FY23 Budget of Rs 39.4 trillion.

The government wants to cut down the number of schemes, merge them or set sunset clauses to stop running them indefinitely.

“Many schemes overlap. Most of the schemes do not have a sunset clause and their outcomes can’t be measured easily,” a senior official told FE.

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For example, the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) was rolled out in April 2020 for three months to give succour to people after Covid-19 broke out. Under the scheme, more than 81.35 crore people are eligible for 5 kg free wheat/rice per person per month – a family of five will receive about 25 kg grains free-of-cost in addition to the 25 kg the family is entitled to receive at Rs 2/kg under the National Food Security Act (NFSA).

It was later extended till November end of 2020. The scheme was re-introduced in May 2021 in the wake of the second wave of the pandemic and then got extended till FY22 end. Even though the distress level has come down, the scheme was extended till December of FY23 at a cost of over Rs 1.2 trillion, given assembly elections in many states.

“There was no need to launch a separate scheme (PMGKAY) as it is often politically difficult to roll back schemes. The extra benefits could have been simply extended to the NFSA beneficiaries for a desirable period,” the official said.

Concerns arise because even after some recent consolidation, specific-purpose transfers have been channelled through a large number of discretionary cost-sharing CSS and fully-funded CS schemes. They are not generally linked to outcomes and are process-based.

Similarly, the fertiliser subsidy, which might cost the Centre about Rs 2.5 trillion in FY23, needs to be rejigged to bring down the burden on the fisc.

The Pradhan Mantri Gram Sadak Yojana was a well-designed CSS to connect every village with pucca roads and was intended to be there for ten years when it was launched in 2000. Even after 20 years, there is no sunset clause set for it even though most villages are now connected with pucca roads.

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The concerns result, in part, from a large number of schemes, their concurrence with state responsibilities and their burdensome matching requirements, especially for states with lower fiscal capacity.

“It will be difficult to close down any scheme before general elections (in early 2024). But, one will see substantial action on rationalisation of CS and CSS after that,” another official said.

Officials reckon that there is a strong need to build institutional capacity in the states and shift to well-designed output-based transfers while rationalising the multiplicity of central schemes.

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First published on: 29-11-2022 at 03:05 IST