Welfare schemes: Fund utilisation critical

The proposal to reduce the number of Centrally Sponsored Schemes (CSS) to 30-odd from the current 72, has assumed significance against the backdrop of the 14th Finance Commission’s award, raising the transfer of taxes to States from 32 to 42 per cent. It is understood that the amount of funds in each CSS which States can spend on their discretion within the overall parameters of the main scheme – known as ‘flexi funds’ – has also been proposed to be raised to 25 per cent from 10 per cent.

The proposal has the unanimous approval of a sub-group of Chief Ministers set up by Niti Aayog. Headed by Madhya Pradesh’s Shivraj Singh Chauhan, the panel divided the CSS into two groups – core and optional schemes. The former would include legislatively backed schemes, such as NREGA, Swachh Bharat, Sarva Siksha Abhiyan, National Rural Health Mission, Indira Awas Yojana, poverty elimination schemes etc.

The funding pattern of these core schemes would be 60 per cent by the Centre and the remaining 40 per cent by the States. For the optional schemes, the Centre’s and the States’ share would be 50 per cent each. The impact of this decision has several consequences. First and foremost, it is widely agreed that the efficiency of the Central government is much better than most, if not all, State governments.

Keeping this in mind, if the monitoring is left to State governments, there is every possibility of more corruption and lesser benefits to the targeted population. Secondly, with the curtailment of Central funds, most of the State governments may not actually give their share of funds but resort to unfair manipulation.

The logic that with the increased fund allocation under the 14th Finance Commission, the States would have to use these for welfare schemes may theoretically seem quite appropriate. But in reality, the increased funds would only be used for short-term populist measures to gain political mileage and not help the poor and the economically weaker sections per se. It is well-known that if welfare schemes were strictly monitored, the benefits to the masses, mainly in the rural areas, would have been far greater.

There is justification on the need for economic and/or financial decentralization that is, devolution of funds to the lowest tier of the administration. But given the political reality of the country where there is large scale corruption, devolution should be accompanied with strict monitoring to ensure best results. It is a fact that gram panchayats have very little decision making power and everything is decided at the State level or at best at the district level – zilla parishad.

The recent socio-economic and caste census (SECC), released recently by the Finance Minister, reveals that over 49 per cent of the 17.91 crore households in rural India may be considered under various welfare schemes, depending on their specific deprivation. The degree of deprivation poses an intractable challenge to the present NDA government if it wants to improve the living conditions of the poor.

For example, the dismal scenario is illustrated by the fact that over 51 per cent are dependent on manual labour while 30 per cent of rural households own no land and 2.37 crore households live in one-room kuccha houses constituting 13.25 per cent of 17.91 crore households. In such a scenario, it is thus imperative that the benefits of the welfare schemes must reach those for whom these are intended for.

Only then can the desired effects of improvement in the quality of life of the lower segments of society take place. If the implementation mechanism is not strengthened, India’s emergence as a major power in the international scene may be greatly jeopardized. The urban bias in Indian planning has led to the neglect of rural areas where majority of the country’s population reside. Mere talk of ‘inclusive growth’ by all governments is no reassurance.

By Dhurjati Mukherjee