Context: The Centre has tightened the fund flow rulebook on Centrally Sponsored Schemes (CSS) even further and for the first time has also brought in a ‘penal interest’ clause for delays in fund transfers by states.
- States have been asked to ensure that their share of funds are transferred to the Single Nodal Agency (SNA) for CSS scheme within 30 days of receiving central funding instead of 40 days, as allowed earlier.
- Any delay beyond 30 days would attract a ‘penal interest’ of 7% per annum. This ‘penal interest’ by a state that delays prescribed fund flow will be transferred to the Consolidated Fund of India.
Centrally sponsored scheme
The Union government supports several developmental initiatives at the state level. The category of centrally sponsored schemes comprises programmes that have a national character or a regional character. Earlier, there were nearly 67 centrally sponsored schemes, but many of them were phased out after the suggestions of the 14th Finance Commission were implemented.
Centrally Sponsored Scheme Vs Central Sector Scheme
The central welfare schemes at the state level fall into two broad categories.
- The first category is centrally sponsored schemes, and the second is the central sector schemes.
- While the Union government fully funds the central sector schemes, centrally sponsored schemes are jointly funded by the Centre and states.
- While centrally sponsored scheme are implemented by states, central sector schemes are implemented by centre directly.
- The Centre Sector Schemes are mainly formulated to cover subjects which are under the Union List or the Concurrent List whereas centrally sponsored schemes covers items that are listed in state list.
Funding pattern of Centrally Sponsored Scheme
- There are several models of funding of centrally sponsored schemes, but a large part of the funding comes from the Centre.
- In most of the cases, the Union government and the states fund these schemes at a 60:40 ratio.
- Ratio of funding could vary , the funding ratio could be 50:50, 60:40, 70:30 or 75:25. In the case of north-eastern states, 90 per cent of the funds come from the central government.
- Union government spends nearly 12% of its annual budget on centrally sponsored schemes.
Categorisation of Centrally Sponsored Scheme
i) Core of the Core Schemes: Those schemes which are for social protection and social inclusion should form the core of core and be the first charge on available funds for the National Development Agenda.
The six core of the core schemes are:
- MGNREGA or the Mahatma Gandhi National Rural Employment Guarantee Act
- Umbrella Scheme for Development of Scheduled Castes
- Umbrella Programme for Development of Scheduled Tribes
- Umbrella Scheme for Development of Minorities
- Umbrella Scheme for Development of Other Vulnerable Groups
ii) Core schemes: Focus of CSSs should be on schemes that comprise the National Development Agenda where the Centre and States will work together in the spirit of Team India.
iii) Optional Schemes: The Schemes where States would be free to choose the ones they wish to implement. Funds for these schemes would be allocated to States by the Ministry of Finance as a lump sum.
The two optional schemes are:
- Border Area Development Programme
- Shyama Prasad Mukherjee Rurban Mission