Restructuring Of Centrally Sponsored Scheme

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.

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