- Centrally Sponsored Schemes have become central to India’s welfare governance, yet they continue to raise concerns over fiscal autonomy and cooperative federalism.
- Scheme Expansion: India currently has over 80 CSS operated through 20+ ministries & departments.
- Fiscal Burden: CSS expenditure amounts to nearly 1.5% of India’s GDP.
- Transfer Dominance: CSS constitute over 50% of total transfers from the Centre to States.
- Welfare Delivery: Major CSS like MGNREGA, PMAY, and NHM together absorb over half of the total CSS expenditure nationwide.
- National Priorities: Over 80 CSS implemented through 20+ ministries support health, education, water, housing, and rural development goals.
- Regional Equity: CSS accounts for over 50% of Centre–State transfers, supporting fiscally weaker states in welfare programme implementation.
- Cooperative Federalism: Shared funding models like 60:40 and 90:10 promote Centre–State coordination in implementing national development programmes.
- MGNREGA: Provides guaranteed rural employment and livelihood security through wage-based public works.
- Pradhan Mantri Awas Yojana (PMAY): Aims to provide affordable housing for urban and rural poor households.
- National Health Mission (NHM): Strengthens public healthcare delivery, maternal health, and primary health infrastructure across India.
- Jal Jeevan Mission: Seeks to provide functional tap water connections to every rural household.
- Samagra Shiksha: Promotes inclusive and quality school education from pre-primary to senior secondary levels.
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Issues in CSS Framework
- Fiscal Imbalance: CSS accounts for nearly 1.5% of GDP and over 50% of Centre–State transfers, limiting the fiscal autonomy of States.
- Centralisation Bias: More than 80 CSS with multiple sub-schemes ignore regional diversity, weakening cooperative federalism and local effectiveness.
- Scheme Proliferation: Over 200 sub-components exist across CSS, increasing administrative burden and raising implementation costs.
- State Dependency: States must match funding in many schemes, increasing fiscal stress and widening disparities in development capacity.
- Outcome Weakness: No scheme closure despite periodic reviews; focus remains on expenditure rather than measurable outcomes or efficiency gains.
- Article Reorientation: Article 282 should return to residual status with transfers routed through Articles 270 and 275 via Finance Commission.
- State Autonomy: No CSS for State List subjects to prevent overlap and strengthen the constitutional fiscal federalism balance.
- Union Funding: Union List subjects should be fully Central Sector Schemes where “He who decides pays” ensures accountability.
- Concurrent Flexibility: Concurrent List schemes should follow flexible, principle-based cost-sharing instead of a uniform one-size-fits-all implementation model.
- Scheme Threshold: Only schemes above ₹500 crore annual outlay should qualify as CSS, ensuring scale, efficiency, and relevance.
- Zero Budgeting: Every scheme must undergo zero-based review during each Finance Commission cycle, with renewal based on proven evidence.
“Cooperative federalism is a necessity for India’s development,” observed PM Modi; a rationalised CSS framework can strengthen states, fiscal autonomy, and inclusive governance.
Reference: Live Mint
PMF IAS Pathfinder for Mains – Question 688
Approach
- Introduction: Write a brief introduction about Centrally Sponsored Schemes.
- Body: write how centrally sponsored schemes have strengthened welfare delivery, highlight structural challenges associated with CSS and suggest reforms for an outcome-oriented and federal governance framework.
- Conclusion: Emphasis on an outcome-oriented CSS approach to enhance fiscal autonomy and strengthen cooperative federalism for effective governance.
