Centrally funded plans face the axe

SCHEMES THAT HAVE OUTLIVED THEIR RELEVANCE WILL BE TERMINATED, SAYS EXPENDITURE SECRETARY T V SOMANATHAN

NEW DELHI: The Union government will slash India’s 131-odd centrally sponsored schemes worth ₹3.8 lakh crore by a third in FY22 based on the recommendations of the 15th Finance Commission, a top finance ministry official said.

Schemes that have outlived their relevance will be terminated and schemes with low outlay will be consolidated to make them more impactful, expenditure secretary T.V. Somanathan said.

“We have done an exercise. There are 131 centrally sponsored schemes. We intend to reduce the number of schemes by approximately one third taking into account the recommendations of the Finance Commission. The schemes with a very low outlay when it is spread across states, it becomes a thin, non-impactful kind of scheme. So, we want to reduce the number of such schemes as well as those schemes which have outlived their relevance over a period of time and consolidate them into a smaller number of more impactful schemes. This will be implemented during FY22,” Somanathan said in an interview.

In order to utilize funds from the centre, states need to contribute 40% of the outlay in CSS, except the North Eastern states that contribute 10%. This reduces the untied funds that should be available to states with no strings attached. States have been demanding more flexibility in implementing the schemes while reducing their proliferation. Many previous committees including a sub-group of chief ministers under Niti Aayog chaired by Madhya Pradesh chief minister Shivraj Singh Chouhan in 2015 had said the ‘one-size-fits all’ approach of CSS was adversely affecting outcomes. States have been urging the centre to transfer such funds directly to them so that they can design schemes according to their own needs.

According to the FFC, 15 of the 30 umbrella CSSS account for about 90% of the total allocation under CSS. Many umbrella schemes have, within them, a number of small schemes, some of them with negligible allocations. “A threshold amount of annual appropriation should be fixed, below which the funding for a CSS may be stopped. Below the stipulated threshold, the administrating department should justify the need for the continuation of the scheme. As the life cycle of ongoing schemes has been made co-terminus with the cycle of Finance Commissions, the third-party evaluation of all CSSS should be completed within a stipulated timeframe. The funding pattern of the CSSS should be fixed upfront in a transparent manner and should be kept stable,” the FFC said in its report tabled in Parliament on Monday.