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EDITORIAL ANALYSIS–Constitution’s Seventh Schedule, which differentiates between spending by the centre and states, needs a re-look

The Editorial covers GS paper 2 [Government policies and interventions for development in various sectors and issues arising out of their design and implementation.]

Image result for Central Sector and Centrally Sponsored Scheme

Introduction

  • Schedule 7 of Indian Constitution and difference between Central Sector and Centrally Sponsored Scheme.
  • The essence of federalism lies in the sharing of legal sovereignty by the Union and the federating units. 
  • The most precise way of demarcating the respective areas of the federation and federating units is to demarcate their respective areas in regard to legislation. 

What are the reasons?

  • Demarcation of legislative power helps in defining boundaries of the executive power also, as usually the former controls the latter.
  • It is easier to verbally formulate, with reasonable precision, the various topics on which the legislative power can be exercised, as the legal system of a country would usually have had occasion to deal with the topic in some form or other.
  • Seventh Schedule provides division of powers between the Union and the States in terms of List I (Union List), List II (State List) and List III (Concurrent List). 
  • Presently, the Union List contains 100 subjects (originally 97), the state list contains 61 subjects (originally 66) and the concurrent list contains 52 subjects (originally 47). 

What is the central sector scheme?

Image result for Central Sector and Centrally Sponsored Scheme

  • Central sector schemes are schemes with 100% funding by the Central government and implemented by the Central Government machinery.
  • The central sector schemes are mainly formulated on subjects mainly from the Union List.
  • Besides, there are some other programmes that various Central Ministries implements directly in States and UTs which also comes under Central Sector Schemes.
  • In these schemes, the financial resources are not shifted to states.

What are the divisions?

  • Financing of core of the core schemes: these schemes comprises six umbrella schemes. After restructuring, the Core of the Core schemes will retain their expenditure allocation framework. Most of these schemes prescribes specific financial participation by states. For example, in the case of MGNREGA, state governments have to incur 25% material expenditure.
  • Financing of core schemes: In the case of core schemes, the funding pattern is 60:40 for center and states respectively. But for difficult states (NE and Himalayan states), there will be 90:10 pattern.  
  • Financing of Optional Schemes: For these schemes, the normal funding pattern is 50:50 and for difficult states its 80:20. States have the flexibility to decide whether to initiate a specific scheme or not.

Conclusion

  • The Seventh Schedule was a product of historical evolution and circumstances and contemplated a certain structure of this optimal level of governance. 
  • However change is the law of nature. 
  • A CSS restructuring/rationalisation debate requires relook at the Seventh Schedule, and cannot be done without consultation with states at an appropriate forum.

Source: The Indian Express.