Government expenditure on social sector schemes would undergo a major overhaul as the 15th Finance Commission (FC) is likely to recommend a significant realignment of funds for centrally sponsored schemes.
The FC may recommend a drastic pruning of centrally sponsored schemes, or even suggest amalgamating some of them with central sector schemes, which are 100 percent funded by the central government.
Chairman of the 15th Finance Commission NK Singh, told CNBC-TV18: “The entire area of centrally sponsored schemes is an area of confusion and mess”.
While there are 29 centrally sponsored schemes, the number of sub schemes has mushroomed to over 100 over the last few years. “Under each scheme, there are all kinds of things floating around,” Singh noted.
The Finance Commission is also cognisant of the Centre loosing revenues after increase in states’ share in central taxes to 42 percent, and a “deep rationalisation” of the centrally sponsored schemes where the Centre contributes 60 percent of the funding, could be one way to free up resources.
“The central government from its own budget spends 3.5 lakh crore on centrally sponsored schemes. It must ask itself whether it is getting the return for such a large outgo of revenue from the government coffers,” the chairman observed.