Proliferation of centrally sponsored schemes (CSS)

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Despite severe fi scal imbalances in the country, manifested in continued high

fi scal defi cits through most of the 1990s, CSS have proliferated during the

decade. In the terminal year of the ninth fi ve-year plan (2001), there were

360 schemes in operation as CSS. The latest fi ve-year plan has called for a

convergence of similar schemes and the elimination of schemes that have

outlived their utility, viewing the ‘mushrooming growth’ of CSS as a ‘case

of the state overreaching itself’ (GOI, 2000). The Planning Commission

recommended eliminating 48 schemes, merging 161 schemes into 53, and

retaining the remaining 135 schemes, implying a continuation forward of

a total of 135 schemes.

The large number of schemes under the CSS are a major source of

ambiguity in assessing total government expenditures on targeting programs,

since some of the schemes are directly targeted at poverty alleviation, while

others have less direct yet substantial benefi ts for the poor in the medium

and long term. The selection of specifi c schemes as poverty targeted will

necessarily be qualitative, and vary according to sources. Figure 2.2 provides

trends in total expenditure on targeting programs during the 1990s based

on one such classifi cation.

As can be seen, expenditures have increased substantially in nominal

terms, by a factor of almost 500 per cent. However, due to relatively high

infl ation rates in the fi rst half of the 1990s, the increase in real terms – in

1993–94 prices – has been relatively more modest. In particular, expenditures

in real terms remained relatively static during the 1990s following an increase

in 1993–94, and have only increased more recently in 2000.

For comparison, Table 2.4 provides estimates by the Planning Commission

on poverty related schemes in 1999–2000. According to these estimates,

total expenditure on poverty programs was Rs 342.6 billion, but if we

exclude the subsidies on food and kerosene oil, the total is only Rs 170.2

billion. However, these data do not include transfers directly to the district

governments by the center, which, as already noted, can be substantial (Rs

150 billion in 2002).

Although the estimates vary, they are quantitatively in the same order

of magnitude. Nayak et al. (2002) estimated total expenditures on schemes

Source: Shariff et al. (2002).

Figure 2.2 Trends in central government expenditures on targeted programs (nominal and in 1993–94 prices)

under CSS at approximately Rs 250 billion in 2000, including direct transfers

from the center to the districts. This amount was almost 3–4 times higher

than all Offi cial Development Assistance to India in 2000, which was US

$1.49 billion or almost Rs 70 billion (at an exchange rate of Rs 47/US

$1). Thus, notwithstanding a relatively static trend in real terms through

much of the 1990s, expenditures by the Government of India on targeting

programs are higher by signifi cant orders of magnitude compared to all aid

to the country. Not all CSS are narrowly defi ned poverty-targeted programs,

since some of them may be more broadly targeted, focusing on irrigation

or road development for example. At the same time, these amounts are also

supplemented by expenditures made by state governments to share in costs

of the schemes under CSS.

Table 2.4 Poverty programs in India, 1999–2000

Name of the Program/Ministry Buduget allocation in

1999–2000 (Rs billion)

Rural Development Schemes 94.3

Food Subsidy 92.0

Subsidy on kerosene 80.4

Health & Family Welfare (only 70% of the outlay) 28.4

Social Justice & Empowerment Sector 12.1

Integrated Child Development Services 11.5

Midday meal 10.3

DPEP 7.6

Watershed development through agriculture 2.3

Tribal development 1.9

Swarnajayanti Shahari Rozgar Yojana (Urban Poverty) 1.8

Total 342.6

Source: GOI (2000), Chapter 31.

Table 2.5 shows trends in the relative composition of schemes under CSS

over the last two decades in terms of broad heads of development. Evidently,

the share of schemes under agriculture and rural development and social

sectors has been rising consistently, exceeding 60 per cent in the previous

decade, at the expense of schemes targeted at industry and minerals, energy

and communications sectors. There was a marked increase in 2002–03, the

fi rst year of the tenth fi ve-year plan, in the share of schemes directed at

transport and in the share of ‘others’, which is due to several new schemes

announced for impoverished northeastern states of the country. The

increased share of transport refl ects a major expansion of road construction

in India funded by the center, but implemented by the states.

Table 2.5 Distribution of central plan allocations through ministries, by

heads of development

Sixth Seventh Eighth Ninth 2002–03

Plan Plan Plan Plan

1980/81– 1985/86– 1992/93– 1997/98–

1985/86 1989/90 1996/97 2001/02

Industry and Minerals, 51.0 44.0 25.3 16.9 13.0

Energy, Communications, 33.0 40.6 62.5 61.3 55.3

Agriculture, Irrigation, Rural

Development, Health and

Family Welfare, Education,

Water, Sanitation, Housing,

Urban Development, SC’s

and ST’s Welfare

Transport 14.1 14.1 9.3 17.3 21.3

Others 1.9 1.3 2.9 4.5 10.4

Total 100.0 100.0 100.0 100.0 100.0

Source: GOI (2000), cited in Saxena and Farrington (2003).

The large expenditures on poverty reduction through the CSS are

diffi cult to track for two reasons. First, they are routed through different

ministries of the central government of India with little centralization of

the relevant information. For example, although the aggregate budget

of the Government of India provides budgetary allocations on different

schemes, the information is scattered across accounts of different ministries

implementing the schemes. In addition, even within the relevant ministries,

the funds are allocated across numerous schemes, some large and some quite

miniscule.6 As noted already, while the expenditures on the CSS in real terms

have not risen sharply, the schemes themselves have proliferated, resulting

in numerous instances of renaming schemes accompanied by merging and

restructuring of schemes that allocate specifi c components into other newly

created or renamed schemes. The result is erosion of transparency.

Table 2.6 presents an overview of direct poverty-targeted programs

in India, identifying major schemes under the CSS and the ministries

implementing the schemes. Only schemes with central funding exceeding

Rs 1 billion in 2001–02 are shown in the table. Clearly, several ministries of

the central government are involved in implementing targeting programs,

but, in terms of number of major schemes, the major entity involved is the

Ministry of Rural Development. This is natural given that the vast majority

of the poor in India live in rural areas. Allocations are much higher for

schemes implemented by the Department of Public Distribution under

the Ministry of Consumer Affairs, which provides subsidized food under

the public distribution system targeted to those below the poverty line, and

the Ministry of Fertilizers. However, fertilizer subsidies are distributed to

the producers rather than directed to poor farmers, and their treatment as

targeting measures is controversial.