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Reforms galore: Restructuring of central schemes

PlanCom says the new system would push officials in various departments to compete among themselves to prove their worth

Sanjeeb Mukherjee  |  New Delhi 

The National Bamboo Mission, an annual Rs 100-crore centrally sponsored scheme (CSS) under the Department of Agriculture, would no longer be run as a separate programme. From 2014-15, it would be part of an umbrella programme — National Oilseeds and Palm Mission — and funded by it.

Similarly, the National Programme for Prevention and Control of Diabetes, Cardiovascular Diseases and Stroke and the National Mental Health Programme, with budgets of Rs 125 crore and Rs 130 crore, respectively (according to the Department of Health and Family Welfare’s Budget estimate for 2011-12), would cease to exist as separate programmes. These would be part of the Programme on Non-Communicable Diseases. Also, the Ministry of Environment and Forests’ Project Elephant would be part of the Integrated Development of Wildlife.

These schemes, along with 81 others, would be part of bigger programmes, following the Union Cabinet clearing a proposal to restructure central schemes.

Earlier, a committee headed by Planning Commission member B K Chaturvedi had suggested reducing the number of these schemes from the current 147 to 60. Now, it would stand at 66, seven more than that proposed by the committee. “There were some departments such as the Ministry of Environment and Forests that wanted to retain the CSS on Project Tiger…We had suggested it be clubbed with a wider programme called the conservation of Natural Resources and Environment Protection. Therefore, some adjustment was made,” Chaturvedi told Business Standard.

Project Tiger had an annual allocation of Rs 162.71 crore, according to the 2011-12 Budget estimate. Chaturvedi said the aim was that all central government departments should have at least one CSS. So, after much deliberation and the formation of a group of ministers headed by Agriculture Minister Sharad Pawar, the Union Cabinet decided to have a higher number of such schemes than that proposed by the Chaturvedi panel.

Apart from Project Tiger, schemes such as the home ministry’s Border Area Development Programme, the Department of Rural Development’s National Social Assistance Programme, the Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, as well as four others, have been added to the list.

At 85 per cent, the department of employment and labour saw the steepest reduction in the number of centrally sponsored schemes, which was brought down to 2 from 13 earlier.

The departments of animal husbandry, dairies and fisheries, and health and family welfare both saw a reduction of 80 per cent each in the number of schemes.

Schemes for the department of minority affairs were brought down to 1 from 4 earlier — a decline of 75 per cent.

The rural development department, on the other hand, with a reduction of 17 per cent, was the least affected of all.

The Cabinet also announced two new and vital aspects of central schemes: First, from 2014-15, all centrally sponsored schemes, including the 17 flagship ones, would empower states to spend 10 per cent of the annual allocation under each scheme according to their requirements. In 2013-14, about Rs 27,358 crore (across schemes) would be in the hands of state governments and these would determine how to spend it, albeit within the broad guidelines of the programme. For instance, in the case of the National Plan for Diary Development, for which Rs 85.02 crore was allocated in 2013-14, state governments would have the flexibility to spend Rs 8.5 crore according to their requirements. However, for this, state governments would have to wait for a year.

Second, the guidelines under each scheme have been made flexible; a high-powered committee comprising the Planning Commission secretary, the finance secretary, chief secretaries of every state and secretaries in the department or ministry concerned would determine the changes to be made in the guidelines of each scheme, to meet state-specific requirements.

So far, guidelines for each CSS were decided by the Centre; states had little say in these matters, and this made implementation and success of the schemes difficult. A senior Planning Commission official cited the example of the Pradhan Mantri Gram Sadak Yojana, the government’s flagship programme. Under the programme, funds are allocated to states to build roads, bridges etc, and money is released only when all criteria such as width of road, its length, the number of bridges, etc, are met. However, on a disaggregated basis, states in the northeastern parts of the country need narrow roads, as these areas are mountainous. These also need more bridges, as these areas are dotted with small culverts and rivulets. However, this doesn’t apply to central or western India, regions that have largely plain terrains and wider rivers.

Therefore, when funds under the Pradhan Mantri Gram Sadak Yojana were released, northeastern states failed to utilise these, owing to the guidelines.

This led to massive underutilisation of allocated funds in some states. “For 10 per cent of the funds, states would be fully free; for the remaining 90 per cent, they would have the freedom to alter the guidelines,” the official said. For central schemes, the Centre usually provides 75 per cent of the funds, while states provide 25 per cent (for northeastern states and Jammu & Kashmir, the funding ratio is 90:10).

Need for restructuring
For several decades, states have complained the Centre binds their hands in making full use of the funds allocated under various central schemes. Also, as 25 per cent of the funds for each CSS are contributed by the state (10 per cent in case of northeastern states and Jammu & Kashmir), state governments should have a say in the implementation of the schemes, as well as the freedom to spend, they argued.

The Chaturvedi panel had recommended states be given 10 per cent flexibility in spending for centrally sponsored schemes and 20 per cent in case of flagship programmes. However, the Union Cabinet settled for 10 per cent flexibility across the board.

Gradually, the Centre has increased its budgetary support for these schemes. In the 9th five-year Plan (1997-98 to 2001-02), the gross budgetary support (GBS) was Rs 99,001.68 crore. Of this, assistance through centrally sponsored schemes accounted for 31.3 per cent. In the 11th five-year Plan (2007-08 to 2011-12), GBS was Rs 15, 88,273.24 crore; central schemes accounted for 41.59 per cent of this. The percentage of direct central assistance to GBS fell from 43.75 per cent in the 9th Plan to 25.02 per cent in the 11th Plan.

The benefits
As Chaturvedi said, the Cabinet’s move would not only strengthen the country’s federal structure but also, for the first time, empower states to have a say in the Centre’s policymaking. An official said in a first, funds to states would flow directly from the Consolidated Fund of India to state governments, through centrally sponsored schemes. “This will help reduce manipulation at the implementation level and give states a sense of belonging, as they, too, contribute to the Consolidated Fund of India,” the official said.

The exercise would also reduce bureaucracy. The Planning Commission has said in time, officials in various departments would compete among themselves to prove their worth. However, the official said, “When a directorate or CSS is merged with another, what would the officials involved with this do? For the time being, they will form part of the larger programme, but over time, there would be duplicity in work.”

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First Published: Sat, June 29 2013. 22:48 IST