States against cut in funding of schemes

Ask for more money from the Centre for Centrally Sponsored Schemes whose funding pattern has been changed in the Budget for 2015-16

State governments on Friday pressed for continued central assistance to eight Centrally Sponsored Schemes (CSS) which have since been fully transferred to them, following the recommendations of the 14th Finance  Commission (FFC).

They also asked for more money from the Centre to CSS whose funding pattern has  been changed in the Budget for 2015-16.

Chief Ministers of seven states and Union Territories held the first meeting, here on Friday, on the restructuring of CSS. Madhya Pradesh's Shivraj Singh Chouhan chaired it. They decided to constitute a committee under the chairmanship of Sindhushree Khular, chief executive officer of the NITI Aayog, to prepare a draft report on the suggestions made by various CMs, to be presented in the second meeting to be held on April 27.

The Union government in the 2015-16 Budget divided the 66 central schemes into three categories. The first, of 31, comprise those to be fully funded by the Centre. The second category of eight have been transferred to the states; the Centre says it is not financially responsible for these. The FFC wanted the Centre about 30 such schemes to the states.

These include some well-known ones like the Backward Region Grant Fund (BRGF) and a scheme on modernisation of police forces.

The third category, of 24 schemes, is of those whose funding would be shared between Centre and states in a changed pattern.

The states had reservations on the the second and third category of schemes. “We have made some suggestions based on the specific needs of states. For example, in the case of Jharkhand, we have said the Centre should continue to fully support programmes like BRGF and police modernisation,” said that state's CM, Raghubar Das.

Uttar Pradesh's Akhilesh Yadav also urged the Centre to not reduce or lower its share in the central schemes.

Chouhan said some states also demanded that the flexible component in schemes fully funded by the Centre, currently 10 per cent of the total annual allocation, be enhanced. Under this component, state governments are free to use 10 per cent of the total annual allocation under a CSS.

Apart from dividing the 66 CSS into these three categories, the Centre has also lowered its share of funding in both the hitherto fully funded and partially funded ones. It has said it expects the states to fill the gap from the additional money they've got as part of the FFC recommendations.

As a result of this, the Plan budget was lowered from Rs 5.75 lakh crore in the 2014-15 Budget Estimate to Rs 4.65 lakh crore in 2015-16. The Centre’s share in Central Assistance to State Plans was brought down from Rs 3.38 lakh crore in 2014-15 to Rs 2.04 lakh crore. Transfers through the CSS has been cut from Rs 2.52 lakh crore in 2014-15 to Rs 1.69 lakh crore in 2015-16.