Centrally Sponsored Schemes (CSS) are schemes that are implemented by state governments of India but are largely funded by the Central Government with a defined State Government share. Some examples of such schemes are Mahatma Gandhi National Rural Employment Guarantee Act, Pradhan Mantri Gram Sadak Yojana etc. Subject matter of such scheme is generally fond in the State List. It is done to ensure realization of national objectives and uniformity in implementation across the nation. The CSSs are implemented to achieve social objectives like poverty reduction, improving health services, raising food production etc.

CSS always been a point of contention between the Centre and States:

• The criticism voiced by the States on the proliferation in the number of Centrally Sponsored Schemes:
  • In 1968, the National Development Council Committee recommended a cap on the value of the Centrally Sponsored Schemes as 1/6th of the Central Plan assistance to States. However, the Central Ministries continued to introduce new schemes and the financial limit came to be exceeded. The number of CSS increased from 45 in 1969 to 190 at the end of the Fifth Five Year Plan.
  • However, the Central Ministries continued to introduce new schemes and the financial limit came to be exceeded.
  • To resolve various issues raised by state concerning CSS, NDC constituted an Expert Group under the Chairmanship of K. Ramamurty. However, the group in its report said that the criteria to continue with existing CSS/start new CSS as were too broad and that fulfilment of an important national objective as one of the criteria was essential.
  • Later, Narshimha rao committe laid down criteria for the formation of a new CSS;
    • The fulfillment of an important national objective e.g. poverty alleviation, education etc.
    • The programme has a regional or inter-State character
    • The programme or scheme should be in the nature of a pace setter or should relate to demonstration, survey or research.
  • This committee suggested that schemes other than those having high national importance could be considered for transfer to the State Plans.
• Previously, NDC observed that the better off States were benefiting more through the CSS as they had better resource matching and implementation capabilities compared to poor States. Thus, it can further widen the divide between rich and poorer states. And poorer states are left dissatisfied.
• Generally, States desire that the CSS along with funds should be transferred to the States particularly relating to those sectors which come within the purview of the State List. However, there exists divergence of opinion on the issue of transfer of CSS. This divergence was not only among the States but also between the States on the one hand and the Central Ministries/Departments on the other:
  • Andhra Pradesh suggested abolition of all CSS with transfer of funds to the States in true spirit of cooperative federalism.
  • Arunachal Pradesh proposed that Union Government should finance 100% CSS.
  • other North Eastern States suggested retention of few important schemes as CSS and others to be transferred to States with full funding.
• Delivery of goods;
  • Under the Centrally Sponsored Schemes Central Government of India prepare the guidelines and sanction the fund for the scheme (e.g. PM Awas yojna etc.) without taking responsibility to deliver the goods without corruption.
  • If any Indian lodge a grievance to the concerned Ministry or department of Govt. of India through Centralised Public Grievance Redress and Monitoring System (CPGRAMS), the related Ministry or department by saying “the subject do not fall under the purview of this Ministry”, closed the case by forwarding it to the concerned state govt.
  • According to a Press Trust of India news in 2014, on an average, around 42,000 grievances are received every month on Centralised Public Grievance Redress and Monitoring System (CPGRAMS) and in the Prime Minister’s Office.
• It is seen by many as against to the idea of federalism. As center are interfering with the subjects listed under the state list.
• The union government had amended the terms of reference (ToR) issued to the Fifteenth Finance Commission, asking it to examine a separate mechanism for funding of defence and internal security.
  • The amendment was based on the rationale that if Union government is required to contribute through Centrally Sponsored Scheme (CSS), on the matters of the State List, then the states too should contribute to items like defence in the Union List.
• According to the former Planning Commission’s 2001 B K Chaturvedi report, restructuring in CSS should be done, to resolve some of the structural problems:
  • CSS has multiple objectives and service delivery standards are not clearly defined.
  • In principle, there should be consultations with states in designing the schemes, but this is hardly done.
  • “The one-size-fits-all” approach cannot succeed in a large and diverse country like India.
• Such schemes promoted uniformity but generally ignored the diversity between the states which required flexibility in schemes.
• The CSSs have been criticized on the ground of poor ownership of the States, inadequate monitoring and evaluation of programmes. In view of the fact that the Central Ministries have a large number of CSS, there is generally very little concurrent evaluation.
  • To ensure meaningful and effective evaluations, the funds of the CSS should be monitored by independent organizations which are not part of the implementation process.

After restructuring as per suggestions of the 14th Finance Commission, there are 29 centrally sponsored schemes. These are broadly divided into two categories – core of the core schemes and core schemes. Six centrally sponsored schemes fall in the category of core of the core schemes, or the most crucial schemes for the government of India.

• There are 6 core of the core schemes:
  • National Social Assistance Programme
  • MGNREGA or the Mahatma Gandhi National Rural Employment Guarantee Act
  • Umbrella Scheme for Development of Scheduled Castes
  • Umbrella Programme for Development of Scheduled Tribes
  • Umbrella Scheme for Development of Minorities
  • Umbrella Scheme for Development of Other Vulnerable Groups
• 23 others are Core schemes: e.g.
  • Green Revolution
  • White Revolution
  • Blue Revolution
  • Pradhan Mantri Krishi Sinchai Yojna (PMKSY)
  • Pradhan Mantri Gram Sadak Yojna
  • Pradhan Mantri Awas Yojna (PMAY)
  • Rural Drinking Water Mission
  • Swachch Bharat Mission (SBM)
  • National Health Mission