Economy

Centre to release funds for schemes to States only on ‘need basis’, post full disclosure

Shishir Sinha New Delhi | Updated on May 11, 2020 Published on May 11, 2020

Falling short: A portion of Central funding is linked to performance to enhance quality and encourage health-sector reforms   -  The Hindu

To focus on a new effective monthly review of funds released and utilised

With the Covid-19 pandemic severely impacting the Centre’s revenue mobilisation, the Finance Ministry has made it clear that further release of funds for Central Sector Schemes (CS) and Centrally Sponsored Schemes (CSS) will only be on a ‘need basis’ after collecting detailed information. Also, there will be a new system of monitoring that will focus on a more effective monthly review.

Expenditure Secretary TV Somanathan has outlined the new system in a communication to all secretaries in Central government ministries and departments. The contents of the letter, as seen by BusinessLine, read: “For the current year, we are faced with twin challenges of not only substantially lower mobilisation, but also higher expenditure demands on the exchequer to accommodate the extra funding requirements of the relief and incentive packages.”

CS refers to schemes which are 100 per cent funded by the Centre and implemented by its machinery. As of now, there are 685 such schemes with a total outlay of over ₹8.31-lakh crore for the current fiscal.

Crop insurance schemes, PM-Kisan, subsidy for fertilisers and Price Stabilisation Fund are some of the main schemes under this category.

Under CSS, a certain percentage of the funding is borne by the States, which can vary, and the implementation is by the State governments. There are 30 CSS with total outlay of nearly ₹3.40-lakh crore. Rural Employment Guarantee, PM Awas, National Livelihood Mission are some of the key CSS.

The new system

The letter noted various requests for release of funds to States/Agencies without obtaining Utilisation Certificates and matching share from the respective States in case of CSS.

“While the strain on State exchequer on account of lockdown situation prevailing in the country is recognised, it is equally important that Central releases to State Treasury (in case of CSS) and implementing agencies (in case of CS and projects) do not remain parked,” the letter said, while mentioning that the Centre borrows money and pays interest while States park funds received from the Centre in treasury bills and earn interest.

Detailing the system for CSS, the Expenditure Department suggested that all Central government ministries and departments prepare a statement, comprising details such as unspent balances as on April 1, 2019 and on April 1, 2020; Central share released during 2019-20; due State share up to March 31, 2020; gaps in release of State share up to March 31, 2020; total funds available and actual expenditure during 2019-20.

Now, of the unspent amount as on April 1, 2019, only half the sanctioned funds may be released as the first tranche. The second tranche may be released only after due confirmation of the release of first tranche (along with State share) to State Nodal Agency along with utilisation certificate. Ministries will be required to confirm whether provision for States’ share has been made in their budgets or not.

Regarding CS, the system requires collection of information on a monthly basis regarding balance available with the implementing agencies as on April 1, funds released from April 1, total funds available, expenditure report till the end of the month and balance funds to be released.

Published on May 11, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.