Dispensing with 90:10 funding pattern under Central schemes will have serious implications for J&K: Mufti


Demands “Minimum Guaranteed Devolution” to States at NITI Ayog Meet 

Calls for front-loading of funds in April to expedite CSS projects

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NEW DELHI: The Chief Minister Mufti Mohammad Sayeed today stated that dispensing with the 90:10 funding pattern for Centrally-sponsored Schemes (CSSs) for Special Category states will have serious implications for J&K which is strategically located and has seen a difficult period since 1947.

He said states like J&K and the North East, which have huge locational disadvantages coupled with challenging security scenario, will be severely handicapped if the 90:10 funding pattern is done away with. “We have seen a turnaround for the better in these states now. The recommendations to change funding pattern and de-link some Centrally-sponsored schemes from Union support will seriously hamper the implementation of these schemes in a state like ours,” said the Chief Minister.

Mufti was speaking in NITI Ayog here today during the meeting of the Sub-Group of 10 Chief Ministers, a think-tank constituted for rationalization of Centrally-sponsored Schemes.

Minister for Finance, Dr. Haseeb. A. Drabu, Principal Secretary, Planning & Development, B. R. Sharma and Principal Resident Commissioner, J&K, L. D. Jha also participated.

The meeting, which was chaired by the Chief Minister of Madhya Pradesh, Shivraj Singh Chauhan, was also attended by the Chief Ministers of Rajasthan, Arunachal Pradesh, Jharkhand and Nagaland, besides the Lt. Governor of Andaman & Nicobar Islands.

While suggesting cutting down CSSs to 17 Mega Schemes only from the present 66, the Chief Minister said the other schemes should be wound up and its resources subsumed in the kitty of 17 Mega Schemes. “More than 86% funds are being sourced to 17 flagship programmes under CSSs. It will be prudent if the other 14% funds allocated to 49 other schemes are transferred for a more coordinated implementation of CSSs in the states,” he suggested.

Asking the Centre to see from the same lens and do away with its policy of one-size-fits-all for forging a better match between schemes and needs of the states, Mufti urged upon the Central Government to consider funding pattern of all Centrally-Sponsored schemes for Special Category states in the ratio of 90:10.

The Chief Minister said it is quite possible that fiscal imbalance in states can be caused by the fiscal mismanagement of the Centre. “If the Centre doesn’t meet its budgeted revenues, the states will bear the brunt of the shortfall,” the Chief Minister said while pushing for a “Minimum Guaranteed Devolution” for the states.

Referring to the State’s weak resource base, the Chief Minister said J&K is experiencing difficulties to fund large number of CSSs. He asked for continuation of financing scheme for CSSs as 90% grant and 10% loan. “Keeping in view certain innate structural and infrastructural deficiencies afflicting the State, we are not in a position to take any Centrally-sponsored Scheme for outright transfer to the State Budget,” he said, while requesting the Central Government to continue to treat J&K as a Special Category state, as recommended by the National Development Council.

While highlighting the recommendations of the 14th Finance Commission, the Chief Minister called for implementation of cooperative federalism by considering more decision-making powers and greater devolution of Central taxes to the States. He said the CSSs should not be treated on a standalone basis and must be seen as part of an integrated fiscal federal system.

Reiterating its earlier position of allowing greater flexibility in the guidelines of Centrally-sponsored Schemes by factoring in local requirements, the Chief Minister suggested front-loading of bulk CSS releases preferably in the month of April, keeping in view the limited working season in states like J&K. “We have been raising the issue of allowing flexibility in guidelines of the schemes for quite some time. Non-release or untimely release of funds results in cost and time overruns. Due to difficult terrain and inaccessibility of certain areas, the cost of delivery of public services in J&K is very high as compared to other parts of the country,” Chief Minister said and added that cost norms for Central schemes should be based on State Schedule Rates.

The Chief Minister said that the recommendations of 14th FC have been such that they have decisively given more revenues and responsibilities to the states but the manner in which these recommendations have been implemented by the Union Government has hurt the Special Category states.

Pointing out the difficulties some of the States are facing in catching up in growth and development, Mufti called for accommodating certain area-specific requirements while designing the guidelines of the schemes. He said Centre should consider the security situation, hostile geographical conditions, limited working season and the massive hit the State’s infrastructure took last year due to devastating floods while framing the guidelines of the Central schemes.

Speaking on the occasion, the Finance Minister Haseeb A. Drabu said the NITI Ayog will have to re-look on how the Centrally-sponsored schemes are implemented in the States, keeping in view the recommendations of 14th Finance Commission. He said the new system under 14th FC will become regressive if the size of financial transfer to the States from the Centre is reduced. “With a tax buoyancy of only 18% under 14th FC, we will have to look for other ways to fill the gaps of funding CSSs,” Dr. Drabu said.

Speaking on the occasion, Shivraj S. Chauhan, who is the Chairman of Sub Group, said the Centre has agreed to increase the share of states in Centre’s tax revenue from 32% to 42% as recommended by the 14th FC. He said in view of the demands raised by the Chief Ministers of the SG, the SG may consider categorization of CSS on the basis of 90:10, 75:25 and 50:50 ratio. He further said the SG will examine reducing the components of individual Central schemes and allocate funds to complete the left-over / incomplete projects. “We will also consider the request of the Member Chief Ministers to increase the flexi-funds from 10% to 25% to give States powers to implement projects as per their local needs,” he said.

Chauhan also announced constitution of a Working Committee under CEO NITI Ayog, comprising Nodal Officers from all the States, for finalizing the Draft Recommendations that will be presented in the next meeting of the SG of Chief Ministers, scheduled to be held on April 27 next month.

Out of the 66 Centrally-sponsored schemes to be rationalized, the NITI Ayog, in the Budget 2015-16, is planning to implement 17 flagship schemes unaltered, 33 with changed funding pattern while 08 will be de-linked from the Union Government support. The other 08 schemes are part of the devolution to the States or those which have been restructured under the new funding pattern.

The Sub Group (SG) of Chief Ministers on rationalization of Central schemes is tasked to examine the existing CSSs and recommend measures for streamlining its implementation and making these adequately flexible. The SG will also suggest reforms in schemes which are to be continued under CSS in light of 14th Finance Commission recommendations. It will also recommend measures for better coordination between the Centre and the States for achieving the objectives of the scheme.