Centrally sponsored scheme

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Recently, the central government has tightened the fund flow rulebook on Centrally Sponsored Schemes (CSS) even further and for the first time has also brought in a ‘penal interest’ clause for delays in fund transfers by states.

Why in news?

  • States have been asked to ensure that their share of funds is transferred to the Single Nodal Agency (SNA) for the CSS scheme within 30 days of receiving central funding instead of 40 days, as allowed earlier.
  • Any delay beyond 30 days would attract a ‘penal interest’ of 7% per annum.
  • This ‘penal interest’ by a state that delays prescribed fund flow will be transferred to the Consolidated Fund of India.

What is a centrally sponsored scheme?

  • These are schemes that are funded partially by both the Central and State Governments.
  • It is a channel which the central government uses to help the states run their plans financially.
  • The amount of state participation varies from state to state.
  • Their implementation rests on the Union territories and the States.
  • These schemes are further divided into three categories based on their funding patterns i.e. the core of the core, core and optional.
    • The flagship schemes of the central government are called Core of Core schemes or umbrella schemes.
    • Examples: Mahatma Gandhi National Rural Employment Guarantee Programme (MGNREGA), National Social Assistance Programme etc.
    • Core schemes: The funding pattern is usually 60:40. The central government takes up more share in these schemes and the states are expected to pitch in the remaining funds.
    • Although, in cases of difficulty where states like North Eastern states, Jammu & Kashmir, and some special category states need extra attention, a 90:10 ratio of funding can be seen usually.
    • Examples: Pradhan Mantri Gram Sadak Yojana (PMGSY), Pradhan Mantri A was Yojana (PMAY), Integrated Watershed Development Programme etc.
    • Optional schemes: Normally state governments plan the schemes and request the central government to fund some portion of the total outlay. The general funding pattern of the optional schemes is 50:50 (State: Center).
    • However, the Central government may take up the task of funding more if the scheme is to be implemented in backward areas or difficult terrains.
    • Examples: Border Area Development Programme, and Shyama Prasad Mukherjee Rurban Mission among others. 


Q1) What are the Central sector schemes?

Central sector schemes (CSS) are schemes that are fully funded and implemented by the central government of a country, without any financial contribution from the state or local governments.

Source: Centre tightens fund flow rulebook for CSS schemes; brings penal interest clause