Categories of Centrally Sponsered Schemes

Budget 2016-17 has introduced a new classification system for the Centre’s spending.

The new system divides Centrally Sponsored Schemes (CSS) into three categories:

1.     Core of the Core.

2.   Core

3.   Optional Schemes.

Key facts:

§  The new system has accorded the Mahatma Gandhi National Rural Employment Guarantee Scheme the highest priority by deeming it ‘Core of the Core’.

§  This system has been put in place as a run-up to the next financial year, when the Plan/Non-Plan distinction in government expenditure will be done away with.

§  As per the new system, the Core of the Core schemes will retain their expenditure allocation framework. For example, MGNREGA had 75 per cent of the material expenditure from the Centre and 25 per cent from the states.

§  The Core schemes will have a 60:40 formula, while the Optional schemes will have a 50:50 formula, with the states having the flexibility to decide whether to invest in these or not.

§  Under the new classification, eight schemes will be classified as Core of the Core. including MGNREGA and all the umbrella schemes for the upliftment of minorities, Scheduled Castes, and Scheduled Tribes.

§  The Core schemes, 33 in number, include schemes as far-ranging as the Krishi Unnati Yojana, the Smart Cities programme, and the modernisation of the police force.

Background:

This system is based on the recommendations of a sub-committee of chief ministers formed by Niti Aayog for the rationalisation of the CSS. The exercise, to rationalise Plan and Non-Plan schemes of all Ministries and Departments, was undertaken by the committee for effective outcome based monitoring of implementation of the programmes and schemes and to ensure optimum utilisation of resources.

Is it a good move?

A.  Yes and why?

The classification is trying to segregate the schemes by importance. The state governments were earlier taking their own decisions regarding many of these schemes. Now the Centre has said that some are important schemes and the states can take their own decisions regarding the others.

B.  No and why?

It is meaningless to have 30-odd specific-purpose transfers (where central funds are transferred for a specific use) without any standard of outcomes. Also, the new system does not address this issue of linking expenditure to outcomes, it simply re-classifies the expenditure.