Revamp of Centrally Sponsored Schemes

Niti Aayog is working on updating Centrally Sponsored Schemes (CSSs), which are a big part of the Centre’s budget, to check if they are still relevant, effective, and sustainable.

DMEO Proposals

• The Development Monitoring and Evaluation Office (DMEO) has invited consultancy firms to help evaluate Centrally Sponsored Schemes (CSSs).
• Nine Sectors: The evaluation will focus on nine key sectors:
  
  • Agriculture and Allied Sector
  • Women and Child Development
  • Education, Urban Transformation & Skill Development
  • Rural Development
  • Drinking Water and Sanitation
  • Health Sector
  • Water Resources, Environment, and Forest Sector
  • Social Inclusion
  • Law & Order and Justice 
    
  • Delivery
    

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About Centrally Sponsored Schemes (CSSs)

• Centrally Sponsored Schemes (CSSs) are funded by both the central and state governments, helping states financially with their programs.
• State Participation: The amount contributed by the state varies from one state to another.
• Implementation: Managed by states and Union territories.
• Current Status:
  • There are approximately 75 Centrally Sponsored Schemes (CSSs) in place with a budget of Rs 5 trillion for FY25, which represents 10.4% of the Centre’s total budget of Rs 48.2 trillion.

• Categories of Centrally Sponsored Schemes (CSS)

• Centrally Sponsored Schemes (CSS) are divided into three types based on how they are funded:
• The flagship schemes: This scheme of the central government is called Core of Core schemes or umbrella schemes.
  • Key Schemes: These are the most important schemes of the central government, often called umbrella schemes.
  • Examples:
    • Mahatma Gandhi National Rural Employment Guarantee Programme (MGNREGA)
    • National Social Assistance Programme (NSAP)
• Core Schemes
  • Funding Pattern: Usually, the central government pays 60% and the state covers 40%. 
    • In some regions like Northeastern states, Jammu & Kashmir, and special category states, the central government may cover 90%, with the state paying 10%.

• • Examples: Pradhan Mantri Gram Sadak Yojana (PMGSY)
    • Pradhan Mantri Awas Yojana (PMAY)
    • Integrated Watershed Development Programme (IWDP)
• Optional Schemes
  • State-Led: These are planned by the states, which ask the central government to share the cost, usually in a 50:50 ratio. 
  • The central government may provide more funds for projects in backward or tough areas.
  • Examples:
    • Border Area Development Programme (BADP)
    • Shyama Prasad Mukherjee Rurban Mission (SPMRM)

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Government’s Strategy for CSSs

• Reduction and Merging of Schemes: The government aims to reduce the number of schemes, merge some of them, and set expiration dates (sunset clauses) to prevent them from running indefinitely.
• Scheme Classification for Analysis
  • Pre-15th Finance Commission Cycle:
    •  Schemes introduced before the 15th Finance Commission cycle (prior to 2019-20).
      • These schemes are more suitable for a comprehensive evaluation.
  • Post-15th Finance Commission Cycle:
    • Schemes introduced during or after the 15th Finance Commission cycle.
      • These schemes are analyzed separately from pre-15th Finance Commission schemes.
• Consultants’ Role: Consultants will analyze these schemes and recommend whether they should continue as they are, be modified, scaled up or down, or even discontinued. 
  • They will also suggest design changes for better implementation if required.
• Focus on State-Level Funding
  • Direct Fund Transfer to States: Consultants will also assess the impact of directly transferring funds to states.
    • It will give states full freedom to implement the schemes according to their needs, which has been a demand by some states.
  • Funding Adjustments Post-2015 Revamp:
    • Previously 100% centrally funded schemes, such as PMGSY, now have a funding ratio of 60:40 in plain areas and 90:1Efficiency and Effectiveness in the Northeast and hilly states.

Need to Revamp Centrally Sponsored Schemes

• Efficiency and Effectiveness:  With the passage of time, many CSS have become outdated due to which it is necessary to streamline these schemes to ensure efficient utilisation of the resources. 
• Flexibility of the states: Different states have different needs and priorities. Revamping CSSs allows high flexibility and enables states to modify schemes according to their requirements. 
• Adaptation to dynamic needs: Socio-economic conditions and priorities change over a time. Revamping CSSs ensures its relevance to the current needs and challenges. 
• Focus on core areas: Through categorization of the schemes into core, core of the core, and optional, the government can head towards important areas such as social protection etc. 

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