States may get 25% of CSS corpus with no strings attached

States may get 25% of CSS corpus with no strings attached

If accepted, the move is expected to add untied funds to the tune of approximately Rs 42,000 cr into the state kitty in the current financial year.

NITI Aayog task force chaired by Madhya Pradesh chief minister Shivraj Singh Chouhan has recommended that 25 per cent of the corpus available under Centrally Sponsored Schemes (CSS) be made available to states without any strings. If accepted, this is expected to add untied funds to the tune of approximately Rs 42,000 crore into the state kitty in the current financial year.

According to a senior government functionary, the task force has almost finalised its report and is likely to submit it to Prime Minister Narendra Modi, who is also the chairperson of the National Institution for Transforming India or Niti Aayog. Besides this, the task force has recommended that the total number of centrally sponsored schemes be reduced to about 25-30 from 67 at present.


The sources said Chouhan met his counterparts from several states and senior Niti Aayog officials, on their part, too had meetings with senior officials of all state governments over the last several weeks. One of the major demands of states run by BJP and non-BJP political parties was the rigid nature of centrally sponsored schemes. This, they complained, forced them to implement and execute programmes even when it was not quite a priority for them. “The ‘one-size-fits-all’ concept does not work for many states. Given the unique set of problems that each state faces, there is a strong need that states get untied money to spend on areas or sectors which benefit people in their region,” said a government functionary involved in the discussions of the task force.

The states are of the view that some of the larger programmes such as the Mahatma Gandhi National Employment Guarantee Scheme, the National Health Mission and the Sarva Shiksha Abhiyaan are retained by all. “In the first governing council meeting of Niti Aayog, it was unanimously decided that there will be certain core programmes relating to health, education and employment that would be implemented by all. These should, however, be fully funded by the Central government,” said a government official. The official simultaneously pointed out that states also need to improve their capacity to spend even if it’s in their own areas of priority. “The previous government allowed states the flexibility to spend 10 per cent of CSS corpus as per their own needs. But not many states could manage this efficiently,” the official said, adding that the higher devolution of 42 per cent in one go this year has left some states in a quandary on how to best spend it.

In the Budget for 2015-16, the government transferred 42 per cent of the divisible pool of taxes to states compared with 32 per cent till last year based on the recommendations of the Fourteenth Finance Commission. However, many states realised in due course that the Centre also substantially reduced the allocation for many Centrally Sponsored Schemes. In other words, the fund transfer to states through CSS faced a significant cut. For instance, the allocation for Integrated Child Development Service was more than halved to Rs 8,000 crore from Rs 16,316 crore in 2014-15. There were some other schemes where the allocation was slashed such as Krishonnati Yojana and Swacch Bharat Abhiyaan.