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‘Money is scarce’ — Modi govt set to axe about 40 schemes that ‘have lost relevance’

Expenditure Secretary T.V. Somanathan tells ThePrint these centrally sponsored schemes are not bad but some hard choices have to be made given the scarcity of funds.

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New Delhi: The Narendra Modi government will prune the list of 131 centrally sponsored schemes to around 90 before March 2022, in a bid to weed out schemes that have lost relevance and give more flexibility to states to choose, Expenditure Secretary T.V. Somanathan told ThePrint in an interview Tuesday. 

While Somanathan did not specify the schemes that will be axed, government sources said education and agriculture ministries, which have a plethora of centrally sponsored schemes (CSS) that are often thinly spread in terms of having an impact, are on the radar.  

A CSS scheme is one where the expenditure is generally shared between the Centre and state in the 6:4 ratio. 

“There has been a proliferation of schemes over the years. Some have lost relevance; some are too small to make a difference,” Somanathan said. “What we are looking at now is a more substantial reduction in the number of schemes by eliminating a lot of small schemes that don’t have critical mass.” 

Somanathan said the government’s intention is not necessarily to cut the budget for schemes. “We may actually reallocate it (funds) to some of the schemes that need more money,” he said.

This, according to him, means states will have more funds for the right schemes. 

“Every scheme goes to 31 states. We will have to look at what is the minimum level at which a scheme needs to have funding for us to be able to share these resources effectively over 31 states and make an impact,” he added.   

The government, however, is not going to touch its flagship schemes such as Housing For All, Swachh Bharat Mission, National Health Mission, National Education Mission and the Pradhan Mantri Gram Sadak Yojana among others.

The Centre has budgeted Rs 3.81 lakh crore for CSS in 2021-22 as against Rs 3.39 lakh crore in 2020-21.

Also read: India could get 8 new cities after Finance Commission provides Rs 8,000 crore grant

‘Hard choices have to be made when money is scarce’

The government has hard choices to make considering the scarcity of funds, Somanathan said. 

“There are so many nice things to do in the world but money is scarce,” he said. “We are not saying the schemes are bad but somewhere hard choices have to be made because otherwise it is just thinly spread and does not have any effect.”

As part of the exercise, the government may merge two or three smaller schemes into one, wherever required. “When you keep the money in very small buckets there is no flexibility,” Somanathan said. “But instead, if money is allocated for one umbrella scheme, there is more flexibility. And each state can choose what is the most relevant to it from that bucket of money.” 

The 15th Finance Commission has also recommended gradually stopping funding for those CSS and their subcomponents that have either outlived their utility or have insignificant budgetary outlays not commensurate to a national programme.

“CSS should grant states significant latitude to tailor implementation modalities to local realities,” the commission has said in its report.

In 2015, a Niti Aayog committee under Madhya Pradesh Chief Minister Shivraj Singh Chouhan had also recommended rationalisation of CSS. 

Somanathan said the Centre had accepted the recommendation back then too and reduced the number of schemes. 

“There was a reduction but it was more of a consolidation into umbrella schemes, in the sense that existing schemes were grouped together,” he said. “…what we are looking at now is a more substantial reduction in the number of schemes by eliminating a lot of small schemes, which don’t have critical mass.” 

This time around, the government has tried to make the majority of the schemes coincide with the new finance commission cycle. “Since we are transitioning to a new Finance Commission period of five years, most of the CSS will actually be readjusted for this five-year period,” he said.  

Also read: Modi govt’s big infra push in Budget — new Development Finance Institution, monetising assets


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