Government plans changes in policy of social schemes funding to states

NEW DELHI: In a move that will give the Congress-led UPA government greater visibility in the state budget, the central government has decided to alter the manner in which funds for flagship programmes are disbursed to the states.

Flagship programmes like the Sarva Shiksha Abhiyan, Mid-day Meals, National Rural Employment Guarantee Scheme and the yet to be launched National Health Mission which are currently classified as centrally sponsored schemes (CSS) will now be reclassified as additional central assistance (ACA). The system of fund disbursal to the states will come into effect from 2013-14.

Funds for the centrally sponsored schemes are routed through the ministries that administer the programmes. Many of these programmes have a component of state contribution and the money is routed to societies set up for the specific purpose of implementing the scheme. In the case of big ticket programmes like SSA, or National Rural Health Mission, the centre’s contribution doesn’t get reflected in the state budget.

With additional central assistance, the decision on the amount of money to be released lies with the Planning Commission. Administrative ministries will monitor the implementation.

Experts say that it will give the central government greater discretionary powers since there are different formats for giving additional central assistance. There is concern that the reclassification of the flagship schemes could be used as a political tool by the Centre to either deprive the states of funds or release it generously.

The move, mooted by the Planning Commission, would mean that funds given by the centre will now be reflected in the state budgets, thereby giving greater credence to the Central government’s claim that it is the primary fund giver for the developmental programmes in the states. There is some concern, that the central government will have greater power to decide how much money a state should get, even denying funding to some states on the ground that funds were not being utilized properly.

The change in funding system will give the states flexibility in using the funds. This will be welcomed if the funding is based on a normative formula. Many states have complained about the over-centralisation of developmental schemes through uniform guidelines that don’t take into account local needs and peculiarities. However, experts point out that the Planning Commission would have total discretion over funding to the states and each could be treated differently. The present funding structure of ACA varies from scheme to scheme.