The expenditure in Centrally Sponsored Schemes (CSS) fell 9% on year to Rs 4.12 trillion in FY23 as states were not able to accelerate spending in many schemes, partly due to non-contribution of their share, sources told FE.
As against the budget estimate of Rs 4.43 trillion for FY23, the CSS allocation was enhanced to Rs 4.52 trillion in the revised estimate for the year. The actual CSS spending was Rs 4.54 trillion in FY22.
However, a substantial sum from Rs 4.12 trillion released to states was lying idle with their treasuries even in March either due to slower implementation or lack of transfer of states’ share (40%) in the schemes.
Given the floating of funds with states in CSS from FY23, the fresh releases to states got slowed down in the initial months of FY24.
So, the Centre has launched a special drive to accelerate spending in the schemes to enable states fully utilise Rs 4.76 trillion earmarked for FY24, sources said.
To facilitate bulk release of funds to states for schemes, the Centre has also given ministries exemption from cash control norms till September. According to cash management guidelines, ministries were to attune bulk expenditure items to the monthly GST collection and quarterly advance tax payments for smooth exchequer control.
The Centre has also released an extra instalment of (Rs 59,140 crore) tax devolution in June and fast-tracking release of funds under the interest-free Rs 1.3 trillion capex loans to states to improve their liquidity position for projects.
However, with some states using the central scheme funds to finance their fiscal deficit, the Centre has also made the penal interest rate at 7%/annum from April 1 on the number of days of delay beyond 30 days in the transfer of Central share to the state nodal agency (SNA) account.
The Centre earned a neat Rs 4,000 crore in interest in 2022-23 after it tightened the norms on funds lying idle with states under CSS.
The Centre managed to retrieve over Rs 40,000 crore lying idle for years after the Centre issued a diktat last year that states either return or spend the unspent balances accumulated over the years in CSS.
The Centre’s pre-condition that states have to fully integrate their treasuries with the Centre’s Public Financial Management System (PFMS) to be eligible to get a share in its 1 trillion 50-year interest-free capex loans scheme in FY23, also helped to unravel the extent of unspent funds in CSS.