The Centre is adamant on sharing only the non-Plan portion of the expense and transferring the entire Plan expenditure to the states, to be met from the increased share in financial devolution. The states, particularly those ruled by the Bharatiya Janata Party (BJP) and its allies, want the Centre to review its decision.
The decision has hurt the border states of Punjab and Jammu and Kashmir and Left-wing extremism (LWE)-affected states of Jharkhand, Madhya Pradesh, Andhra Pradesh, Chhattisgarh and Maharashtra. These states are ruled by the BJP along with regional parties or its allies.
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The issue is also becoming a political hot potato for the Rajnath Singh-led home ministry.
Bihar, which faces an election later this year, and other LWE-affected but non-BJP-ruled states such as West Bengal and Odisha have similar concerns over the issue, a source said.
Officials said the scheme under which the state governments are provided funds by the Centre, to modernise their police forces, was de-linked from central support as part of the government's effort to prune centrally sponsored schemes (CSS). However, it did not find wide acceptance among states, primarily those affected by LWE.
At a recent meeting of the National Institution for Transforming India (NITI) Aayog, Jharkhand Chief Minister Raghubar Das said some states do want the Centre to share the burden of modernising police forces. State police chiefs, too, had in their interaction with the Centre, demanded the scheme's expenses be jointly shared.
According to the 2014-15 revised Budget estimate, the Centre granted around Rs 1,433 crore to the states for the CSS called the National Scheme for Modernisation of Police Forces (MPF). Another Rs 537.50 crore was given as non-Plan expenditure under the head of modernisation of police forces.
The planning was entirely transferred to the state governments as part of restructuring CSS, while the non-Plan part continued to be shared between the two. The sharing was done in the ratio of 90:10 for special category states, 60:40 for non-special category states, including those affected by LWE, the Centre's being the larger share.
A committee of chief ministers is currently looking at rationalisation of CSS, of which modernisation of armed forces forms a part. But sources say the Centre is insisting that the National Scheme for MPF continue to be handled by states.
The committee is chaired by Madhya Pradesh Chief Minister Shivraj Singh Chouhan.