Expenditure under Centrally Sponsored Schemes up by 72.1% till FY22

11 states, UTs spent more than allocated share in FY21; but in FY23, Centre expects to save Rs 80,000 cr

Although the government has been overshooting its Budget targets for Centrally Sponsored Schemes (CSS) over the last two financial years, it may end up saving Rs 80,000 crore this year. This is because of underutilisation of funds and tardy spending by states, according to media reports.

Over the last six financial years, the Budget allocation under CSS has increased by 90.9 per cent – from Rs 2.31 lakh crore in FY17 to Rs 4.4 lakh crore in FY23.

The finance ministry is expected to begin its estimations on the Revised Budget for the current financial year this month.

In some cases, the delay in spending by states is due to the new Single Nodal Agency system, which designates a single nodal account with a bank for each such scheme for the disbursement of funds from the Centre.

Centrally Sponsored Schemes are 49 major and other schemes funded by the Centre but implemented by the states. These include the Mahatma Gandhi National Rural Employment Guarantee Scheme, Jal Jeevan Mission, Pradhan Mantri Awas Yojana, National Health Mission, National Rural Livelihood Mission, and Swachh Bharat Mission, among others.

A Business Standard analysis of the Reserve Bank of India’s (RBI’s) data on state finances found that in FY21 (the last year for which this data is available), 11 out of the 31 states and Union Territories (UTs) spent more than their allocated share of funds under CSS. In FY20 and FY19, only three states had exceeded the Budget allocation. FY20 and FY19 were also the ones when the expenditure under CSS was less than the Budget allocation. 

However, there are some variations in the performance of the states.

In FY21, Arunachal Pradesh and Delhi spent 59.3 per cent and 51.3 per cent more than their Budget allocation, respectively. In the previous financial year, Karnataka (20.9 per cent) and Himachal Pradesh (12.9 per cent) had overshot their Budget allocation. In FY19, Tamil Nadu and West Bengal spent 12.2 per cent and 8.1 per cent more than their allocated Budget, respectively.

The analysis also found that the amount of funds released to the implementation agencies has doubled as a share of the total CSS allocation from 15.9 per cent in FY18 to 31.5 per cent in FY22.  

The implementation agencies received Rs 1.09 trillion in FY22. However, agencies in Bihar, Maharashtra and Tamil Nadu saw a decline in the funds released in FY22 from the previous financial year. Maharashtra recorded the sharpest decline – from Rs 0.33 trillion in FY21 to Rs 0.04 trillion in FY22.