Threefold rise in Plan money routing via state govts

Central assistance to state plans increased to Rs 3.4 lakh crore against revised estimate of Rs 1.2 lakh crore in 2013-14

In an initiative to give more financial power to states for implementing plan schemes, the government said it was increasing the central assistance to state plans three-fold, to Rs 3.38 lakh crore.

The jump was essentially a result of restructuring 126-odd centrally sponsored schemes (CSS) to 66. These includes 17 flagship programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme and the National Food Security Mission.

Due to the restructuring, a portion of the plan funds allocated to ministries will now move as additional central assistance to states, also explaining the major reduction in central plan outlay of ministries in the revised estimates (RE) as against the Budget Estimates (BE) for 2013-14.

The restructuring of CSS was approved by the Union Cabinet in 2013, as recommended by a committee headed by Planning Commission member B K Chaturvedi.

A much higher allocation of Rs 3.38 lakh crore in the state plans for 2014-15 against the revised estimate for 2013-14 at Rs 1.19 lakh crore reflects this change.

Earlier, under CSS, the funds were transferred directly to the implementing agencies. Now, funds will go to the state consolidated funds, as additional central assistance.

The central plan allocation under rural development is down, as a result, from Rs 61,810 crore of RE in 2013-14 to a BE of Rs 7,614 crore in 2014-15. However, under the state plan outlay, the same ministry gets Rs 74,491 crore.

The Northeastern states, Himachal Pradesh and Uttarakhand were given a special package. Additional central assistance of Rs 1,200 crore have been allocated before the end of this financial year to these states, as the finance minister said these “deserve special attention”.

Under non-plan expenditure, grants given to states and Union Territories rose 12.7 per cent from Rs 61,617 crore RE to Rs 69,436 crore in 2014-15 against 60.4 per cent a year before.

The share of various states in the tax revenue is up 21.8 per cent from Rs 3.18 lakh crore RE to Rs 3.88 lakh crore in 2014-15, compared to a 19 per cent rise in the previous year.

The net resources transferred to states and UTs would be Rs 7.83 lakh crore in 2014-15 against Rs 5.28 lakh crore, a growth rate of 48.24 per cent against 10.92 per cent growth last year. The net resources include total grants, loans and CSS.