ASKiIMAN™ ARCHIVE / INDIAN POLITY
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CSS & Federalism

Centrally Sponsored Schemes & Fiscal Burden

PART I — THE MECHANISM

THE FRAMEWORK

Design & Execution

  • **Centrally Sponsored Schemes (CSS):** Designed and partially funded by the Union Government.
  • Implemented entirely by the State Governments.
  • Often fall under subjects within the State List (e.g., Health, Education, Agriculture).
FUNDING PATTERN

The Cost Share

60:40
  • **Core Schemes:** Generally funded in a 60:40 ratio (Center:State) for standard states.
  • **Special Category:** 90:10 ratio for North-Eastern and Himalayan states.
  • **Central Sector Schemes:** 100% funded and implemented by the Union (different from CSS).

PART II — FEDERAL FRICTION

FISCAL DRAIN

The Matching Burden

  • To receive central funds, states *must* provide their matching share (e.g., 40%).
  • This forces states to divert their limited independent revenues toward Union priorities.
  • Reduces the untied fiscal space states need for local, state-specific development.
ONE SIZE FITS ALL

Rigidity & Imposition

  • Strict guidelines formulated in Delhi ignore the geographical, demographic, and economic diversity of states.
  • A health scheme ideal for Kerala may fail completely in Bihar due to rigid structural rules.
  • NITI Aayog actively advocates rationalizing and reducing the number of CSS to grant states more autonomy.
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