A Niti Aayog taskforce chaired by Madhya Pradesh Chief Minister Shivraj Singh Chouhan has apparently recommended that 25 per cent of the funds under Centrally sponsored schemes (CSS) be made available to states as untied monies. If this recommendation is accepted, states would receive a total of Rs 42,000 crore during 2015-16 itself. This recommendation should be viewed in the context of the fairly substantial changes proposed to the CSS policy framework, as well as the 14th Finance Commission (FFC) recommendations on devolution of tax revenues. At this juncture, states have taken stock of what they have lost on the swings and gained on the roundabouts. Although every Central finance commission makes recommendations that are perceived by some states as being less beneficial, the recommendations of the FFC have resulted in a solid 10 percentage point increase in devolution of divisible tax revenues. This is untied money. States could put this money to good use in their own priority areas — be it health, education or early childhood care. It is for this reason that many Central ministries witnessed a sharp decline in CSS allocations. To some extent, allocations have now been raised from the original 2015-16 budget level.
The taskforce’s reported recommendation that programmes on health, education and employment be implemented by all states is welcome. It is also appropriate to reduce the number of CSS to 25-30, as against the current 67. This approach would have a desirable impact on the states’ ability to tailor their development efforts to their requirements. Reduction in the number of CSS would also enable better fiscal management in the states. As far as untied funds to the extent of 25 per cent go, the taskforce should indicate broadly how this money can be spent. According to some reports, the earlier dispensation of 10 per cent as untied money left many states wondering what to do.
The list of 25-30 CSS would also need to be drawn up carefully, so that crucial areas are not left out. A good starting point is to look at the problems that stare us in the face: Rural poverty and unemployment and the resultant lack of income and livelihood security; productivity and drought-proofing of agriculture; lack of access to affordable and sustained healthcare; problems of both quality and access to elementary and secondary education, including the lack of trained teachers, high absenteeism, reluctance to transfer funds, functionaries and powers to enforce accountability to panchayats and lack of schoolrooms and physical infrastructure. Issues relating to malnutrition need serious attention and intervention. At the other end of the spectrum are problems relating to internal security and the quality of policing.
Drawing up this list of 25-30 CSS is as important as the issue of their funding. They need to be adequately funded — Central government funding, state government funds and local government resources have to be factored in. Inadequate funding or midstream lack of clarity will result in idling or misutilisation of available monies. Another problem that has led to poor implementation of even flagship schemes is the hiring of personnel. Many schemes provide for hiring staff on a contractual basis. But many states have hesitated to do so as they are afraid of being saddled with manpower costs if the Centre decides to discontinue the scheme. What states most dislike is the frequent introduction of schemes and their abrupt cessation. This taskforce is a good forum to work out the list of CSS, the precise outcomes these should attain, the period of time in which this should happen and lastly, a solid system of account-keeping and early audit. Impact-assessment by independent agencies is already part of the system and could be further institutionalised.
If the Centre and states can work together to prepare a roadmap, fully involving local governments and factoring in contributions of corporations, India could hope to provide good education, health, nutrition, skill development and jobs, as well as a secure environment in which its citizens can flourish.
The writer is a former member secretary, Planning Commission.