The Central Government frequently complains on the poor performance of the State Governments in…

Question

The Central Government frequently complains on the poor performance of the State Governments in eradicating suffering of the vulnerable sections of the society. Restructuring of Centrally sponsored schemes across the sectors for ameliorating the cause of vulnerable sections of population aims at providing flexibility to the States in better implementation. Critically evaluate.

Ghissu Editorial · Accepted Answer

Restructuring of Centrally Sponsored Schemes since 2013 has given states real but bounded flexibility, protecting core welfare spending while leaving design, timing and a growing cost share with the Centre. The 2015 NITI Aayog Sub-Group ring-fenced MGNREGA and the SC, ST and minority umbrella schemes as core-of-the-core.

**Introduction**

Centrally Sponsored Schemes, funded under Article 282, carry most Union spending on the vulnerable, yet the Centre blames states for weak delivery. After the B.K. Chaturvedi Committee (2011) the Union merged 137 schemes into 66 in 2013, and the NITI Aayog Sub-Group of Chief Ministers (2015) sorted them into core-of-the-core, core and optional schemes.

**Where Restructuring Widens State Flexibility**

SKETCH: spectrum | How Much Say States Get
left: Centre designs
right: State designs
- Tied CSS before 2013
- Core of the core
- Core with flexi-funds
- Optional schemes
- Untied tax devolution

1. **Umbrella and flexi-funds**: Umbrella schemes and flexi-funds (10% from 2013, 25% after 2016) let states adapt schemes to local vulnerable groups.
2. **Ring-fenced protection**: MGNREGA, the National Social Assistance Programme and the umbrella schemes for SCs, STs, minorities and backward classes became core-of-the-core.
3. **Untied money**: The 14th Finance Commission raised states' share of divisible taxes from 32% to 42% from 2015, letting states run their own welfare schemes.

**Why Flexibility Remains Limited**

1. **Matching burden**: The 60:40 sharing strains poorer states, and the December 2025 law that replaced MGNREGA asks most states to bear 40% of its cost.
2. **Central control and squeeze**: Guidelines and Single Nodal Agency rules (2021) stay central, and combined CSS outlays were cut from ₹5.41 lakh crore budgeted to ₹4.20 lakh crore in the 2025-26 revised estimates.
3. **State capacity**: The CAG found Bihar's construction workers' welfare board spent only 5-34% of its funds on welfare during 2017-22, giving the Centre's complaint substance.

**Conclusion**

Restructuring has given states real but bounded flexibility: core welfare spending is protected, but design, timing and a growing cost share stay with the Centre. Outcome-based, untied funding matched by state accountability would serve the vulnerable best through cooperative federalism.

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