What are Centrally Sponsored Schemes (CSS)?
Centrally Sponsored Schemes (CSS) are schemes formulated by the Central Government but implemented by the State Governments with financial assistance from the Centre. Since many subjects such as health, education, agriculture and rural development fall under the State or Concurrent List, CSS serve as an instrument of cooperative federalism by enabling uniform national priorities while allowing States flexibility in implementation.
Funding Pattern
- Shared expenditure between the Centre and States.
- General States: 60:40
- North-Eastern & Himalayan States: 90:10
- Union Territories (without legislature): 100% Central funding
- Some flagship schemes have special funding patterns as approved by the Union Government.
Major Centrally Sponsored Schemes
| Scheme | Ministry | Objective |
|---|---|---|
| Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) | Rural Development | Provides guaranteed wage employment in rural areas. |
| Pradhan Mantri Awas Yojana – Gramin (PMAY-G) | Rural Development | Housing for rural poor. |
| Jal Jeevan Mission (JJM) | Jal Shakti | Functional tap water connection to every rural household. |
| National Health Mission (NHM) | Health & Family Welfare | Strengthening public healthcare and primary health services. |
| Poshan 2.0 | Women & Child Development | Improve nutrition among women and children. |
| Samagra Shiksha Abhiyan | Education | Integrated school education from pre-primary to Class XII. |
| PM POSHAN (Mid-Day Meal Scheme) | Education | Nutritional support to school children. |
| PM Krishi Sinchai Yojana (PMKSY) | Agriculture | Improve irrigation coverage and water-use efficiency. |
| Pradhan Mantri Gram Sadak Yojana (PMGSY) | Rural Development | All-weather rural road connectivity. |
| National Social Assistance Programme (NSAP) | Rural Development | Social security pensions for vulnerable sections. |
Difference Between Centrally Sponsored Schemes and Central Sector Schemes
| Basis | Centrally Sponsored Schemes (CSS) | Central Sector Schemes (CSecS) |
|---|---|---|
| Funding | Shared by Centre and States | Entirely funded by the Centre (100%) |
| Implementation | Implemented by State Governments/UTs | Implemented directly by Central Ministries or agencies |
| Subjects Covered | Mainly State List and Concurrent List subjects | Primarily Union List subjects |
| State Role | Significant role in execution and monitoring | Limited role; mainly facilitation where required |
| Financial Burden | Shared between Centre and States | No financial burden on States |
| Administrative Flexibility | States may adapt implementation within guidelines | Uniform implementation under Central control |
| Objective | Promote national priorities through cooperative federalism | Deliver programmes under exclusive Union responsibility |
| Examples | MGNREGS, NHM, PMGSY, Jal Jeevan Mission | PM-KISAN, Central Universities, PM CARES for Children, National Scholarship Portal |
What are the Key Issues Related to Centrally Sponsored Schemes (CSS)?
- Fiscal Burden on States: The matching fund requirement places significant pressure on States with limited fiscal capacity, leading to delayed implementation.
- Erosion of Fiscal Federalism: Excessive dependence on CSS reduces States' autonomy in deciding developmental priorities.
- One-size-fits-all Approach: Uniform scheme guidelines often ignore regional socio-economic and geographical differences.
- Proliferation of Schemes: A large number of overlapping CSS creates administrative complexity and duplication of efforts.
- Conditional Funding: Strict Central conditions limit States' flexibility in modifying schemes according to local needs.
- Weak Monitoring and Evaluation: Outcome-based assessment remains inadequate, leading to inefficiencies and leakages.
- Administrative Capacity Constraints: Many States face shortages of trained personnel and institutional capacity for effective implementation.
- 10. Low Utilisation of Funds: Procedural delays, land acquisition issues, and implementation bottlenecks result in under-utilisation of allocated funds.
What Reforms are Needed to Improve the Effectiveness of CSS?
- Increase State Flexibility: Allow States greater autonomy to redesign scheme components according to local needs.
- Rationalise the Number of CSS: Merge overlapping schemes to improve efficiency and reduce administrative burden.
- Ensure Timely Fund Release: Adopt predictable and technology-enabled fund transfer mechanisms.
- Zero-Based Budgeting: Every scheme should undergo a fresh evaluation during each Finance Commission cycle, with its continuation contingent upon demonstrated performance and measurable outcomes.
- Strengthen Outcome-Based Monitoring: Shift from expenditure-based evaluation to measurable performance indicators.
- Enhance Cooperative Federalism: Institutionalise regular Centre-State consultations through forums such as the Inter-State Council and NITI Aayog.
- Build Administrative Capacity: Strengthen local institutions, digital governance and human resources for better implementation.
- Improve Transparency and Accountability: Expand social audits, public dashboards and third-party evaluations.
- Promote Convergence: Integrate related CSS to avoid duplication and improve service delivery.
- Implement Finance Commission Recommendations: Align CSS design with the principles of fiscal decentralisation and strengthen State finances.
Important Committees/Reports
- 14th Finance Commission (2015): Recommended greater fiscal autonomy to States through higher tax devolution.
- Sub-Group of Chief Ministers on Rationalisation of CSS (2015): Recommended reducing the number of schemes and increasing State flexibility.
- 15th Finance Commission: Emphasised outcome-based monitoring and better coordination between Centre and States.
Conclusion
Centrally Sponsored Schemes remain a vital instrument of cooperative federalism by combining national priorities with State implementation. Their long-term success depends on greater fiscal autonomy for States, timely fund flow, outcome-based governance, and flexible design that accommodates India's diverse developmental needs.
