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Kerala Economy Journal

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Does the budgetary allocation for CSS meet the development priorities?

Authors: Aisha Ibrahim Mohammed , P S Renjith | Published on: 15-Mar-2022

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Abstract

Compared to the budget estimate of 2021-2022, the budget estimate of 2022-23 witnessed an increase of 16.6%, wherein the core CSS registered a growth of about 21 percent, the core of core CSS registered only about 3 percent growth.
Notably, the centre has allocated Rs. 73,000 crores for the Mahatma Gandhi National Rural Employment Guarantee Program for 2022-23, the same as the 2021-22 budget figure, while the revised estimate of the scheme for 2021-22 was Rs. 98,000 crore.
The budgetary allocation has concentrated on new schemes rather than strengthening the old schemes that have the potential to stabilize the economy
Though primary sector-oriented schemes received the maximum allocation, rural specific received a poor share, while the social sector schemes registered a moderate growth.

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1. Introduction
Since independence, state governments in India have been receiving financial assistance from the centre through various channels in order to facilitate their development priorities and welfare entitlements. Centrally Sponsored Schemes (CSSs) take a considerable proportion of this assistance. CSSs are those schemes that are designed and partially or fully funded by the Central Government but implemented by State Governments on subjects in the State and Concurrent Lists following the terms fixed by the Centre (Kumar, 2021) . The constitution of India clearly defined this provision via Article 282. Accordingly, the centre can deliver discretionary grants, even beyond their respective legislative competencies (i.e., other than Centre list subjects), for any 'public purpose' .
Notably, CSSs have a huge part in India's policy landscape as they constitute the largest number of specific purpose grants extended by the union government to the states (Kumar, 2021, Dikshit et al., 2007; NITI Aayog, 2015). Although CSS was initially formulated on 'basic national importance' with a limited number of schemes, they have proliferated enormously in each five-year plan in terms of the number of such schemes as well as the share of CSS in total public expenditure in the country (Saxena, 2005; Das and Mitra, 2013). Realizing the growing concerns over CSS, the central government initiated the rationalization process as per the roadmap given by the Chattuvedi Committee in 2013. Accordingly, the budgetary provisions were made for 66 CSS in 2014-15, including 17 Flagship Programmes   to improve their impact and visibility.
Further, following the recommendations of the Sub-Committee of Chief Minister of the state in 2015, CSS has been re-oriented under "core of core scheme", "core scheme," and "optional scheme" brackets. Of the total schemes ,  those for social protection and social inclusion are framed under Core of the Core schemes and given the first charge on available funds for the National Development Agenda. While the centre bear 100% of the expenses for a limited number of "Core of Core" schemes, only 60% of the expenses for Core Schemes. Optional Schemes funds are allocated as a lump sum (50%) to the states by the centre, and states would be free to choose which optional Schemes they wish to implement .  
Through a series of recommendations in the last decade by various Committees that managed to recoat the CSS into the present form, some challenges remain unaddressed. Researchers have already raised concerns on a few issues, i.e., fitting CSS in the scheme of Centre-State relations, the degree of the centre's control over the use of finances by the States, inconsistency in the fund allocation for specific CSS schemes etc. (Kumar, 2021). The ongoing pandemic added fuel to this as it raised fresh concerns on resource needs in social protection, social inclusion, rural development etc. Notably, the rationalization exercise has been still progressing. The centre has recently altered the number by terminating the ones that had outlived their relevance while merging those with a low outlay with more impactful ones. On the other hand, few new schemes like PM-Atmanirbhar Bharat Health Infrastructure Mission, Digitalization of Primary Agriculture Cooperative Societies, Exemplar, Accelerating State Education Program to Improve Results etc. have been added to the recent budgets (Union Budget, 2022).
In such a backdrop, it is essential to see whether the sums allocated to each CSS varied significantly after the rationalization? Is the allocation sufficient to meet the primary objectives such as poverty elimination, rural development, primary sector growth, development spending, and urban transformation, which was earlier part of  Mission 2022. Does the allocation for the core of core schemes consistent? Could the current CSS allocation be adequate to overcome the pandemic shocks? Keeping these questions in mind, we first focus on the trends in sums allocated to various schemes after initiating the rationalization process, particularly mapping the changes in the sums in the 2022-23 budget.
The remainder of the paper are as follows: section 2 analyzes the trends in budgetary allocation for various CSS schemes, Section 3 maps the changes in the 2022-23 budget. Finally, section 4 concludes the study.
2. Trends in budgetary allocation for CSS
Table 2.1 provides the budgetary allocation for the core of core CSS, core CSS, and total CSS from 2016-17 to 2022-23. The budgetary allocation for CSS has increased by almost 90% from Rs. 2,31,900 crores in 2016-17to Rs. 4,42,781 crores in 2022-22, with significant progress in allocating the revenue account. Markedly, compared to the budget estimate for 2021-2022, the budget estimate for 2022-23 witnessed an increase of 16.1%. However, while Core CSS registered an average growth of about 21 percent, the core of core CSS registered only about 3 percent growth in the BE 2022-23 from BE 2021-22 . This implies that the centre prioritizes the fund allocation for core schemes with a 40 percent state share.

Table 2.1: Budgetary Allocation for CSS (in crores)

Year

Core of Core CSS (BE)

Core CSS (BE)

Total CSS (BE)

R

C

T

R

C

T

R

C

T

2016-17

60930

479

61409

170343

148

170491

231273

627

231900

2017-18

71268

488

71757

206329

347

206677

277598

836

278433

2018-19

77283

407

77691

227451

376

227826

304734

783

305517

2019-20

81183

0

81183

249443

66

249508

331544

66

331610

2020-21

85160

0

85160

254203

56

254259

339839

56

339895

2021-22

96773

0

96773

284463

69

284532

381235

69

381305

2022-23

99215

0

99215

343557

10

343566

442772

10

442781

Source: Union Budget, various year; R=CSS on revenue account, C= CSS on capital account  and T= total CSS


Subsequently, we focused on the trends in core of core schemes, which is essential to ensure social protection and social inclusion, but registered merely six percent average growth (see Table 2.2). It is observed that there is no significant progress in the fund allocation for most of the core of core schemes except Umbrella Scheme for Development of SCs and Minorities. Notably, the centre has allocated Rs. 73,000 crore for Mahatma Gandhi National Rural Employment Guarantee Program (MGNREGA), the rural jobs guarantee scheme, for 2022-23 financial year, the same as the past (2021-22), while the revised estimate of the same for 2021-22 was Rs. 98,000 crore.

Table 2.2 CSS allocation for core-of core schemes (in crores)

Year

National Social Assistance Program

Mahatma Gandhi National Rural Employment Guarantee Program

Umbrella Scheme for Development of SCs

Umbrella Programme for Development of STs

Umbrella Programme for Development of Minorities

Umbrella Programme for Development of other Vulnerable Groups

2016-17

9500

38500

4868

3209

3794

1538

2017-18

9500 (0)

48000 (25)

5114 (5)

3490 (0)

4072 (7)

1580 (3)

2018-19

9975 (0)

55000 (15)

5183 (1)

3806 (9)

1440 (-65)

2287 (45)

2019-20

9200 (5)

60000 (9)

5395 (4)

3810 (0)

1551 (8)

1227 (-46)

2020-21

9197 (-8)

61500 (2)

6242 (15)

4191 (10)

1820 (17)

2210 (80)

2021-22

9200 (0)

73000 (18)

6566 (5)

4303 (3)

1564 (-14)

2140 (-3)

2022-23

9652 (5)

73000 (0)

8710 (33)

4111 (-5)

1810 (16)

1931 (-10)

Source: Union Budget, various year; the change in the fund allocation is in parenthesis ()

3. Budget 2022-23 and CSS allocation
To check whether the 2022-23 budgetary allocation for CSS meets its development priorities and overcomes the pandemic shocks, we analyzed the schemes based on their relevance, year of inception, rural development priority, and socio-primary importance.
3.1. Budgetary allocation for major centrally sponsored schemes
Figure 3.1 depicts the budgetary allocation for major CSSs. We observed that all the major schemes registered a decline in their allocation in 2022-23 compared to the 2021-22, while a moderate to reasonable increase in their allocation in the revised estimates of 2021-22. However, there has been either a same or a decreasing trend in the allocation for the budget in 2022-23.
3.2. Budgetary allocation for old and new CSS
As mentioned in the previous section, since 2014, nationwide policy interventions in sectors such as health, sanitation, and antenatal nutrition were introduced through different CSS. Many older schemes have been revamped and rationalised under umbrella schemes. We attempt to classify them on the year of inception. Schemes introduced before 2014 are referred to as the old schemes, and those introduced in and after 2014 are new schemes. Table 3.1 depicts the picture of budgetary allocation for both old and new schemes.
Figure 3.1: Budgetary allocation for major CSSs

 Reference

Aayog, N. I. T. I. (2015). Report of the sub-group of chief minister on rationalisation of centrally sponsored schemes.
Budget, U. (2022). Budget 2022-2023. Ministry of Finance, Government of India.
Das, S., & Mitra, S. (2013). Restructuring centrally sponsored schemes: A brief note on the recent policy measures. CBGA, New Delhi.
Dikshit, A., Viswanathan, R., & Raghunandan, 5. T. R. (2007). Efficient Transfer of Funds for Centrally-Sponsored Schemes. Economic and Political Weekly, 2159-2163.
Kumar, A. (2021). The limits of constitutionality? Centrally Sponsored Schemes in law and policy. Indian Law Review, 1-23.
Saxena, N. C. (2005). Central transfers to states and centrally sponsored schemes. https://econpapers.repec.org/paper/esswpaper/id_3a195.htm.