The approval by a Group of Ministers, which will restructure Centrally Sponsored Schemes (CSS), and merge 170 of them into 79, is a necessary step to eliminate overlap though it has not gone as far as the Chaturvedi Committee’s recommendation of reduction to 59. The CSS, which have proliferated in a bewildering variety, have faced criticism in recent years for being unwieldy and for poor implementation which makes reforms in them necessary. Though the number of such schemes had come down to 99 at the end of the Eleventh Plan, they again shot up to their present number. The CSS are a centre-state issue as, constitutionally, most of the social sectors are in states’ domain but programmes for these are now increasingly being directly funded by the central government. This is a cause of conflict and, in the meetings of the National Development Council, state chief ministers have repeatedly emphasied the need to reduce the CSS, being unhappy with them because they pre-empt resources from the states’ plan priorities as also the lack of transparency, amidst other reasons. The GoM has attempted to meet some of these criticisms by proposing a system of flexi-funds under which state governments can use 20 per cent of the budget allocated for CSS within the broader framework of the programmes. The GoM has also preferred a system of transferring funds from the centre to the state consolidated funds rather than directly to the implementing agencies, which has been a bone of contention.
However, these steps may satisfy the states as the transfer of funds for the CSS takes place in a context where the ruling party in the centre is not the same as the same as in the states. This has increasingly meant that central government transfers to states are influenced by political considerations, as is seen in the re-naming of the schemes after prominent political figures of a particular political party with electoral considerations in mind. To the extent that CSS are a political vehicle for parties in power at the centre to influence state outcomes, the current political environment of multi-party competition with strong regional parties ensures no radical change in these schemes or in the methods for the disbursement of the funds for them will take place in a year which leads up to the elections. This means that many of the flaws in the CSS that lead to poor outcomes are likely to persist. This is unfortunate, as, developed properly, the CSS are a means to address issues of national priority, reduce inequality across states, and provide special focus to poverty alleviation and human development issues.