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REFERENCE NOTE . No. 31 /RN/Ref./December /2013

For the use of Members of Parliament Not for Publication

Centrally Sponsored Schemes

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Centrally Sponsored Schemes

The Government of India is involved in a large number of programmes in

sectors/area such as education, health, labour, skill development etc. that are in the

State List through operation of Centrally Sponsored Schemes (CSS) and provision of

Central Assistance to State Governments. These programmes essentially arose from

the above national objectives and cut across State boundaries. The CSSs are

operationalized by Central Ministries based on scheme specific guidelines and are

implemented by State Governments or their designated agencies1.

The CSSs are implemented to achieve social objectives like poverty reduction,

improving health services, raising food production etc.

Constitutional Provisions

The Constitution of India clearly defines the role of Central and State

Governments in the federal structure. As per the constitutional provision, all activities in

Government sphere are categorized as falling in Central List, State List or Concurrent

List. While there is no ambiguity with regard to the Central List and State List, activities

falling under Concurrent List are subject to overlapping of jurisdiction of the Government

of India and the State Governments. States are primarily responsible for major sectors

like health, education, employment, etc. which often involve large public expenditures.

Since successful implementation of development programmes requires availability of

adequate funds, appropriate policy framework, and effective delivery machinery, the

Central Government needs to work with the States to undertake their responsibility in

effective manner. Recognising the higher resource requirements of the States relative to

their resource raising powers, the Constitution mandates to transfer funds to the State

Governments through statutory transfer of tax receipts collected by the Centre through

the Finance Commission award. In addition, the States access central plan funds

through Centrally Sponsored Schemes and Central assistance to State Plans.

1 India, Planning commission, Report of the Committee on Restructuring of CSS, September,2011, pp.3-4

2

The Constitution has under Part-IV mentions the Directive Principles of State

Policy. These inform the policies of various wings of the Government and act as an

overriding philosophical basis. While these are not enforceable in the same way the

Fundamental Rights mentioned in the Constitution, they indicate the overall policies

which should govern various laws. It is, therefore, important that these are fully kept in

mind when the policies for development of the economy are made2.

Reforms in Centrally Sponsored Scheme

Over a period of several Plans, the number of Centrally Sponsored Schemes

(CSSs) has been growing. Large funds are being transferred to States under these

Schemes. In view of the large diversity of physical and economic infrastructure in the

States, their potential for development and investment requirements, the Schemes need

to provide greater flexibility in their design. The Planning Commission had appointed a

Committee in April, 2011, under Shri B.K. Chaturvedi to suggest measures and identify

changes required in the restructuring of the CSSs. The Committee in its report

submitted on September 2011 has suggested:

1. The number of CSSs should be limited and only those schemes which are

required as a part of the convergence process as a broader scheme have large

outlays so as to make impact across the states to be implemented, the rest to be

weeded out and to be converged with other schemes.

2. The existing CSSs should be categorised into Flagship schemes that have large

outlays and address major national issues; major sub-sectoral schemes to

address developmental problems of major sectors like agriculture, education and

health and Sector-umbrella schemes which deal with the range of problems of

concerned sector. Details of categorisation of schemes is given in Annexure – I.

3. Distribution of CSSs funds among States should be based on transparent notified

guidelines which should be put on the website of the concerned Ministries. The

States may be incentivised to provide larger outlay in certain sectors like health,

education, skill development and rural infrastructure. The incentives could be by

2 Ibid, pp. 1-2

3

provisions of additional funds based on the State’s own efforts to increase

outlays for the sector.

4. The physical and financial norms for the Schemes may be varied depending on

the requirement of the State. A mechanism for developing flexibility in such

norms as against the normal CSS prescription has been suggested. This should

take care of large variation often requested by North East States or States like

Kerala, Rajasthan, Uttarakhand and Himachal Pradesh which have special

needs.

5. All CSS must have 20 per cent flexi funds (10 per cent for Flagship schemes).

These should be utilised by the States to prepare schemes which are especially

suited for the requirement of that State.

6. Each Flagship programme will provide a flexible pool of financial resources to be

used to facilitate and incentivise innovative practices that blaze a trail for others

to follow during the Twelfth Plan period. Statewise central share releases under

important Flagship programme during 2012-13 is mentioned in Annexure – II.

7. There should be a concurrent monitoring and evaluation of the CSS. This should

be done by independent monitors and put on the website of the concerned

Ministry and the Planning Commission. This assessment could be done by

professional institutions, visit of experts to major project-implementing States or

assessment by individual experts by visits to the field3.

Centrally Sponsored Schemes in the Twelfth Five Year Plan

The issue of restructuring of Centrally Sponsored Schemes (CSSs) according to

the report presented by B. K. Chaturvedi Committee and by a meeting held on May 23,

2013 by a group of Ministers endorsed the following principle for implementing a

Centrally Sponsored Schemes (CSSs) / Additional Central Assistance (ACA) scheme in

the Twelfth Five Year Plan.

1. All interventions with similar objectives and beneficiary groups may be taken

under single umbrella scheme.

3 India. Planning Commission, Draft Twelfth Five Year Plan 2012-2017, p. 290.

4

2. Financial outlays should be minimum of Rs. 500 cr per annum.

3. In exceptional cases, schemes with smaller outlays that address interventions in

niche areas like Disability, Tribals, Minorities and Youth may be considered for

inclusion.

In 2013-14, budgetary provisions were made for 137 CSS and 5 other ACA

based schemes (excluding block ACA grant). As part of the restructuring, the Cabinet in

its meeting held on June 20, 2013 has inter alia approved the recommendations of the

Group of Ministers to implement 66 umbrella CSS in the Twelfth Five Year Plan period,

which is placed at Annexure-III. All the 137 CSS and 5 ACA based schemes (total 142)

for which budgetary provisions have been made in 2013-14 were suitably mapped into

the 66 umbrella schemes and 8 of them have been approved to be implemented as

Central Sector Scheme so that no activity / scheme is discontinued. In addition, the

Cabinet has also approved the proposal for providing flexibility in the schemes which

included keeping at least 10% of outlays of CSS as flexi fund and provision for state

specific guidelines which would increase the efficiency of the CSS.4

Flagship Programmes

Some of the important Flagship Programmes being run/ implemented by the

Government of India in various States are as follows:

1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

2. Jawaharlal Nehru National Urban Renewal Mission (JNNURM)

3. National Rural Drinking Water Programme (NRDWP)

4. Indira Awaas Yojana (IAY)

5. Sarva Shiksha Abhiyan (SSA)

6. Mid-Day Meal Scheme (MDM)

7. National Rural Health Mission (NRHM) renamed as National Health Mission 5

The assessment of the outcome and response of various Flagship programmes

in various States is primarily the responsibility of the implementing Ministries of

Government of India. The Union Ministries release funds to the States on the basis of

4 Rajya Sabha Unstarred Question No. 552 dated 08.08.2013. 5 Lok Sabha Unstarred Question no.6707, dated 08.05.2013

5

guidelines of the programmes and performance of the scheme upon receiving the

utilisation certificates for the funds earlier provided to them. The Outcome and

Performance Budgets of the respective Union Ministries presented to the Parliament

also inter-alia contain outcomes against targets achieved under various Flagship

programmes.

As far as the Planning Commission is concerned, the Programme Evaluation

Organisation (PEO) has been evaluating, various flagship programmes to assess their

impact on development, from time to time on behest of the implementing Ministries.

The Twelfth Five Year Plan document as approved by the National Development

Council in its meeting held on 27 December 2012 also indicates about broad

assessment of various Flagship programmes. Various stakeholders including State

Governments and experts have been consulted during plan process. In addition,

Planning Commission Advisers also visited the States. The suggestions for

improvement indicated in these assessments are acted upon by the Ministries in

modifying the design and guidelines of various programmes.

The State-wise details of physical targets and achievements as well as financial

performance of various CSSs during the Eleventh Plan are given at Annexure IV. The

scheme wise performance details of major programmes during 2007-12 is given at

Annexure-V 6.

Monitoring and Evaluation

The CSSs have been criticized on the ground of poor ownership of the States,

inadequate monitoring and evaluation of programmes. In view of the fact that the

Central Ministries have a large number of CSS, there is generally very little concurrent

evaluation. It has, therefore, not been possible to make mid-course changes in the

scheme so as to meet the gaps in the schemes. Concurrent evaluation would enable

such changes in the scheme which can improve its effectiveness. Such a monitoring

system also ensures better performance from the State functionaries. It will be

6 Lok Sabha Unstarred Question no.1590 dated 6.3.2013

6

appropriate to develop independent monitors and evaluation organizations and to

assess the programmes based on field surveys, field visits by experts and, if possible, a

comprehensive assessment in few selected States.

To ensure meaningful and effective evaluations, the funds of the CSS should be

monitored by independent organizations which are not part of the implementation

process.

It is, therefore, recommended that all CSS must have two ingredients. Firstly,

there should be a regular monitoring mechanism and its parameters should be placed

on the website of the Ministry. Secondly, evaluation should be done by independent

evaluations and monitors. Such assessments should also be considered by the Ministry

for assessing the success of the scheme and making changes.

An important area of evaluation is social audit. Such social audit should be done

in accordance with the well-designed programme7.

Conclusion

Better governance is crucial for translating the large outlays of our Flagship

programmes into enduring outcomes on the ground. Implementation of programmes

may be improved through a multi-faceted approach relying on professionalization of

public service delivery, Total Quality Management, innovative use of IT and other

technologies which improve monitoring and supervision. It can also be improved

through greater emphasis on social mobilisation and capacity building, strengthening of

local institutions, and building deeper partnerships with civil society organisations and

the community to determine the needs and aspirations of the people8.

7 op.cit., Report of the Committee on Restructuring of CSS, pp. 45-46. 8 India. Planning Commission, An Approach Paper to the Twelfth Five Year Plan 2012-2017, p.11