Centrally sponsored schemes set to be pruned

Prime minister Narendra Modi (Reuters Photo)

Under attack for reduction of centre’s share on centrally sponsored schemes, the Modi government is all set to go a step forward and do away with most of the schemes in the name of rationalisation of expenditure.

The number of centrally sponsored schemes exceeds 150. These have been re-organised into 28 umbrella schemes.

The Centre’s think tank, NITI Aayog has been asked to kick-start a third-party evaluation process for both central sector (CS) and centrally sponsored schemes (CSS), which are co-terminus with the 14th Finance Commission cycle and will expire on March 31, 2020.

Global consultancy firms KPMG, IPE Global, Deloitte and Ernst and Young have been selected by the NITI Aayog to assess the CSS.

“The extension of schemes from one Finance Commission cycle to another would be contingent on the result of such an evaluation exercise,” an official told DH.

The pre-Budget meetings beginning from October 14 will also discuss tentative ceilings on CS and CSS. The Finance ministry has already kick-started the exercise for the 2020-21 Union Budget to be presented on February 3 this year.

Both, Prime Minister’s Economic Advisory Council Chairman Bibek Debroy and 15th Finance Commission Chairman N K Singh have recommended further pruning of CSS for better spending at a time when Centre’s tax revenue buoyancy has weakened. The outgo on the current tax giveaway to corporates amounts to Rs 1.45 lakh crore.

The 15th Finance Commission is expected to recommend cutting down the number of CS and CSS and the Union Budget for 2020-21 is likely to incorporate recommendations of the Finance Commission. The commission will submit its report by end of November.

Debroy has, in the past suggested that there is no need for CSS for items in the State List. However, a CSS restructuring of this magnitude requires consultation with the states.

The difference between a central sector scheme and centrally sponsored one is that under CS, all expenditure is borne by the Union government. For a CSS, part of the expenditure is borne by the Centre, while the states bear the rest.

The Central Sector Schemes include the crop insurance scheme, Pradhan Mantri Anndata Aay Sanrakshan Yojna, Pradhan Mantri Swasthy Suraksha Yojna, Prime Minister Employment Generation Programme, Skill Development and Livelihoods, Deen Dayal Upadhyay Gram Jyoti Yojna, Sagarmala, MPLAD and so on.

Several chief ministers have complained to the Niti Aayog that CSSs have been expensive for them. The states have been bearing 40% of the cost of the schemes in place of the earlier 20% after they were rationalised.

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