Finance ministry suggests restructuring of central schemes
Officials say the share of central government should be reduced in many such schemes
NEW DELHI: The finance ministry has recommendated further rationalisation of central schemes as well as the Centre-sponsored schemes as the government looks to cut corners for effective fiscal management.
According to sources in the finance ministry, the Department of Expenditure (DoE) has suggested that there are many schemes where the share of the central government should be reduced.
“There is a need to restructure schemes. There are many Centre-sponsored schemes where the share of the Centre is higher, which needs to be rejigged, increasing participation of states. Also, there are schemes which are duplicated by the states.
The Centre cannot unilaterally bear the whole burden. The department is evaluating such schemes,” a senior official in the department of expenditure told this publication. Central schemes refers to schemes that are fully funded by the Centre such as LPG subsidy, Fertiliser Subsidy, Food Subsidy while centre-sponsored schemes are those where a certain portion of funding requirement is borne by the Centre and the remaining by states like PM Awaas Yojana.
The DoE has recommended eliminating such existing schemes as well the sub schemes that are duplicated or have become redundant or ineffective with the passage of time. The official added the central government has already shortlisted about 285 such schemes and recommended re-evaluation. “This is a very critical juncture.
The revenue collection is subdued and we do not see the collection making a complete turnaround before the second half of next financial year. While the budget is aimed at supporting the economy, it has to be rational also with unnecessary expenditure so that fiscally we are not completely derailed,” the official explained.
In December, the expenditure department had asked central ministries to send proposals for continuation of ongoing schemes beyond March 31, 2021. “Necessary rationalisation of existing schemes should be
ensured by administrative ministries/departments,” it said in a office memorandum.