Finance Ministry to cut its expenditure share

States will have to contribute half the money to keep some centrally sponsored schemes running.

While ensuring a higher 42 per cent devolution to states in 2015-16, the Union Finance Ministry has simultaneously proposed to reduce its share of expenditure in a bunch of centrally sponsored schemes from 75 per cent to 50 per cent. This means that states will have to henceforth contribute half the money to keep the schemes running compared with just a fourth till the end of 2014-15.

The proposal has been met with resistance from certain ministries in the Central government and a large number of states. With the new financial year kicking off in a couple of days, the government will have to take a decision on the new funding pattern of about 13 schemes, some of which include big-ticket programmes like Swachh Bharat Abhiyan, Smart Cities, National Health Mission, Housing for All and Integrated Child Development Service.

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The total amount set aside for the 13 programmes in Budget 2015-16 is Rs 74,325 crore. Also included under this are the Rashtriya Krishi Vikas Yojana, National Food Security Mission, Sub Mission on Agriculture Extension, Pradhan Mantri Krishi Sinchai Yojana, AYUSH, National AIDS and STD Control Programme, and afforestation and development of wildlife habitats. Programmes under higher education and secondary education heads also figure in the list.

The decision, according to highly placed government sources, has been taken to compensate for the reduced funding for major programmes under central assistance for state plans from Rs 2.32 lakh crore in 2014-15 to Rs 1.7 lakh crore in 2015-16.

“Schemes have been categorised under several heads based on the proposed funding pattern and the Finance Ministry has sent a proposal to all ministries for altering the sharing pattern of some of those schemes. A decision will have to be taken before the start of the financial year but the chief ministers’ sub-group on CSS headed by MP CM Shivraj Singh Chouhan would have something to say on this,” said a senior official.

Though the Finance Ministry is pushing for the plan, many sectoral ministries are not keen apprehending a loss of not just funding in the projects — if states do not pay their share of the first instalment of funds released, the second would automatically be in jeopardy — but also with states spending more on schemes, there would inevitably be a higher proprietary stake in the schemes. The controlling stake of the Centre in the structure of schemes would then be under threat.

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Ministry of Finance