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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