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The dismal case of slashing schemes and cutting funds

GS Paper 3

Syllabus: Indian Economy


Source: The Hindu

 Directions: This Editorial article has been taken from the Hindu and it majorly talks about the rationalisation of government schemes. Here we are only providing only important points.


Context:  The Union government has discontinued, subsumed, revamped or rationalised over 50% of existing central government-sponsored schemes over the past three years.


Rationalisation of schemes:

  • Union Ministry of Women and Child Development, there are just three schemes now out of 19 schemes, i.e.,
    • Mission Shakti,
    • Mission Vatsalya,
    • Saksham Anganwadi and Poshan 2.0.
      • Mission Shakti itself replaced 14 schemes which included the ‘Beti Bachao, Beti Padhao’ scheme.
    • Under the Ministry of Animal Husbandry and Dairy, just two schemes remain out of 12.
      • Additionally, the Ministry has ended three schemes which include Dairying through Cooperatives, National Dairy Plan-II, etc.
    • Under the Ministry of Agriculture and Farmers’ Welfare, there are now three out of 20 (Krishonnati Yojana, the Integrated Scheme on Agricultural Cooperatives and the Rashtriya Krishi Vikas Yojana).
      • While there is little information on the National Project on Organic Farming or the National Agroforestry Policy.


Reasons behind rationalisation:

  • 15th Finance commission has recommended the rationalisation of CSS schemes.
  • It results in the optimum utilisation of available resources and better outcomes with area-specific interventions.
  • Promotes wider reach among targeted groups.
  • Greater autonomy in fiscal space for states.


Challenges to existing schemes: For schemes that exist, there are challenges such as funding cuts, disbursement and utilisation of funds.

  • The utilisation of funds: As of June 2022, ₹1.2 lakh crore of funds meant for central government-sponsored schemes are with banks which earn interest income for the Centre.
    • For instance, under the Nirbhaya fund (2013) ₹1,000 crores were allocated to the fund annually (2013-16) and remained largely unspent.
  • Funding cuts: The allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) went down by approximately 25% in the FY22-23 Budget.
    • Even the fertiliser subsidy given by the government is on the decline.
      • Allocation for NPK fertilisers (nitrogen, phosphorus, and potassium) was 35% lower than the revised estimates in FY21-22.
    • Funding for wildlife habitat development under the Ministry of Environment, Forest and Climate Change has declined: from ₹165 crores ( FY18-19) to ₹87.6 crores (FY20-21).
  • Disbursement issue: for Accredited Social Health Activists (ASHA), who are the first responders, there have been delays in salaries for up to six months.


Issues with budget cuts and underutilisation of funds:

  • Turning down of scheme: A variety of women-focused development schemes across States are being turned down or ended.
  • Increased rural distress: The Economic Survey 2022-23 has highlighted that demand for the scheme was higher than pre-pandemic levels as rural distress continues.
  • Fertiliser shortage: Reduction in subsidies, when fertiliser prices have risen sharply after the Ukraine war, has led to fertiliser shortages and farmer anguish.
  • Raises question on India’s climate targets: A pertinent question is about meeting climate change obligations in the face of funding cuts.
  • Decline in confidence: Anecdotal cases show that actual funding disbursal for MGNREGA has often been delayed, leading to a decline in confidence in the scheme.


Way forward

  • Rather than downsizing government schemes and cutting funding, one should right-size the government.
  • Providing flexibility to State governments to ensure that the schemes benefit the targeted groups since they implement the schemes.
  • Involving stakeholders before the restructuring of the CSS.
  • Decentralisation of decision-making in schemes so as to overcome inefficient administration.
  • Addressing the disbursal problems, releasing sanction orders and underutilisation of funds problem.
  • Capacity building for an efficient bureaucracy to meet today’s challenge.


Rather than having a target of fewer government schemes, we should raise our aspirations towards better public service delivery.

Insta Links

Prelims link

  • Nirbhaya Fund
  • Centrally sponsored Schemes vs Central sector schemes
  • Seventh Schedule of Constitution
  • Poshan 2.0 and Mission Shakti
  • 15th finance commission

Mains Links:

Q. It is generally accepted that centrally sponsored schemes (CSS) have failed to meet their objectives due to various factors. Critically examine these factors. What measures would you suggest to make these schemes work? Substantiate. (15M)