CENTRALLY SPONSORED SCHEMES (CSS)

What Are Centrally Sponsored Schemes (CSS)?

• Definition: Schemes jointly funded by the Central and State Governments to achieve national development goals (e.g., healthcare, education, rural development).
• Funding Pattern:
  • Core Schemes (90:10): 90% Central funding (e.g., MNREGA, PMAY).
  • Optional Schemes (60:40): 60% Central funding (e.g., Green Revolution, Skill Development).
• Constitutional Basis: Implemented under Article 282 (Discretionary Grants), allowing the Centre to fund state-specific public purposes.

Key Facts

1. Scale:
   • 75 CSS across sectors like agriculture, health, and education.
   • Budget (2024–25): ₹4.76 lakh crore (10.4% of total government expenditure).
2. Examples:
   • Flagship Schemes: MNREGA, PM-KISAN, Ayushman Bharat, Jal Jeevan Mission.
   • Sector-Specific: National Health Mission, Samagra Shiksha Abhiyan.

Why CSS Reforms Are in the News?

• NITI Aayog’s Proposal: Recommended reforms to address inefficiencies and poor fund utilization.
• Critical Issues:
  • Redundancy: Overlapping schemes (e.g., 18 sub-schemes under the Green Revolution).
  • Low Fund Absorption: States often fail to utilize allocated funds due to delays in matching contributions or administrative bottlenecks.
  • One-Size-Fits-All Approach: Centralized guidelines ignore regional disparities (e.g., hill states needing terrain-specific solutions).

Challenges in CSS Implementation

1. Scheme Duplication:
   • Example: Multiple agricultural schemes (e.g., PM-KISAN, Rashtriya Krishi Vikas Yojana) with overlapping objectives.
   • Result: Confusion, bureaucratic delays, and resource wastage.
2. Rigid Guidelines:
   • States cannot tailor schemes to local needs (e.g., coastal states require cyclone-resistant housing, but PMAY guidelines lack flexibility).
3. Fund Utilization Issues:
   • Matching Contribution Failure: Poor states like Bihar or Jharkhand struggle to provide their share (e.g., only 40% of PMAY funds utilized in Bihar in 2023).
   • Late Releases: Central funds often arrive late, delaying projects.
4. Accountability Gaps:
   • No penalties for underperformance; states lack incentives to meet targets.

Proposed Reforms by NITI Aayog

1. Merge Redundant Schemes:
   • Example: Consolidate 18 Green Revolution sub-schemes into 3–4 focused programs.
   • Benefit: Reduce administrative costs and improve targeting.
2. Performance-Linked Funding:
   • Tie fund releases to outcome metrics (e.g., literacy rates, healthcare access).
   • Precedent: Aspirational Districts Programme rewards states for improving SDG indicators.
3. Flexibility to States:
   • Allow states to modify guidelines (up to 30%) to suit local needs.
   • Example: Let northeastern states design housing schemes for hilly terrains under PMAY.
4. Rationalize Funding Patterns:
   • Increase Central share for poorer states (e.g., 90:10 for Bihar instead of 60:40).
5. Digital Monitoring:
   • Use platforms like PFMS (Public Financial Management System) for real-time tracking of fund flows.

Case Study: Green Revolution CSS

• Issue: 18 sub-schemes (e.g., National Food Security Mission, Rashtriya Krishi Vikas Yojana) with overlapping goals.
• Impact: Farmers remain confused about benefits; subsidies fail to reach intended beneficiaries.
• Reform Proposal: Merge into 3 clusters – Crop Productivity, Soil Health, and Market Linkages.

Global Lessons

• Brazil’s Bolsa Família: Unified 5 social schemes into one conditional cash transfer program, reducing leakage.
• USA’s Block Grants: States get flexibility in spending federal funds for broad goals like healthcare.

Criticism of Proposed Reforms

1. Central Overreach: States fear losing autonomy if funding is tied to central priorities.
2. Data Challenges: Measuring outcomes (e.g., education quality) is subjective and prone to manipulation.
3. Political Bias: Risk of rewarding states aligned with the ruling party.

Way Forward

1. Implement Outcome Budgeting: Adopt Karnataka’s model of linking budgets to performance audits.
2. Strengthen State Capacity: Train bureaucrats in project management and fund utilization.
3. Decentralize Planning: Involve panchayats and urban local bodies in CSS execution.
4. Sunset Clauses: Automatically review/terminate schemes failing to meet targets for 3 consecutive years.

Conclusion

CSS are vital for equitable development but require urgent reforms to eliminate redundancy and enhance accountability. NITI Aayog’s proposals, if implemented with safeguards against central overreach, could transform CSS into agile tools for addressing India’s socio-economic gaps. Balancing centralized oversight with state flexibility will be key to achieving the Sustainable Development Goals (SDGs) by 2030.