Congress positioned India in global stage: Ministers Ponnam, Vivek and Azhar

The statement by Minister Ponnam Prabhakar, alleging the Centre reneged on a 2014 promise to expand a scheme to urban areas and diluted it with a 60:40 funding pattern, brings to the fore critical aspects of India's fiscal federalism and Centre-State relations. This issue, while seemingly specific, encapsulates broader challenges in policy implementation, resource allocation, and the spirit of cooperative federalism.

**Background Context and What Happened:**

India's federal structure, though unitary in spirit, relies heavily on financial transfers from the Centre to the States. Centrally Sponsored Schemes (CSS) are a cornerstone of this arrangement. These schemes are designed by the Central Government on subjects predominantly in the State List or Concurrent List of the Seventh Schedule of the Constitution, but with a significant portion of funding provided by the Centre. Their objective is often to achieve national priorities like poverty alleviation, health, education, and rural development, ensuring a uniform basic standard of service delivery across states. Historically, CSS emerged during the planning era to steer national development goals. Over time, their number and scope expanded significantly. The allegation by Minister Prabhakar points to a specific instance where a commitment made in 2014 – likely concerning a social welfare or infrastructure scheme – to expand its reach to urban areas was allegedly not fulfilled. Instead, the Centre is accused of altering the funding mechanism, shifting from a more favorable central contribution to a 60:40 ratio, implying a greater financial burden on the states.

**Key Stakeholders Involved:**

1. **Central Government:** As the architect and primary financier of CSS, the Centre holds significant power in determining scheme design, eligibility criteria, and funding patterns. Its decisions directly impact states' fiscal health and policy autonomy.

2. **State Governments:** These are the implementing agencies for CSS. They bear the on-ground responsibility of delivery and are directly affected by changes in funding ratios. An increased financial burden can strain state budgets, potentially forcing them to cut back on other state-specific initiatives or borrow more.

3. **Beneficiaries (Citizens):** The ultimate recipients of these schemes, citizens in urban areas who were promised expanded coverage, stand to lose if the scheme's reach is curtailed or its effectiveness diluted due to funding constraints.

4. **Political Parties:** The ruling party at the Centre and opposition parties in states (like Congress in this instance) often engage in political discourse over such issues, using them to highlight governance failures or assert state rights.

**Why This Matters for India:**

This issue holds profound significance for India's governance and socio-economic fabric. Firstly, it directly impacts **Fiscal Federalism**. The Centre-State financial relationship is governed by Constitutional provisions, particularly **Article 280** which mandates the establishment of a Finance Commission every five years to recommend the distribution of taxes and grants-in-aid. **Article 282** allows the Centre to make grants for public purposes, even on subjects outside its legislative domain, which is the constitutional basis for CSS. Changes in funding patterns, like the 60:40 ratio, reflect a shift in fiscal responsibility. While a rationalization of CSS and funding patterns was recommended by the 14th Finance Commission (2015-2020) to increase untied funds for states, allegations of reneging on promises or diluting schemes challenge the spirit of cooperative federalism. Secondly, it affects **Public Finance and State Autonomy**. When states have to contribute more to centrally mandated schemes, their fiscal space for their own development priorities shrinks. This can lead to increased borrowing by states (**Article 293**) and potentially impact their compliance with state-level Fiscal Responsibility and Budget Management (FRBM) Acts. Thirdly, it has implications for **Urban Development**. If the scheme was intended for urban areas, its non-expansion or dilution directly affects the quality of life, infrastructure, and service delivery in India's rapidly urbanizing landscape.

**Historical Context and Future Implications:**

The debate around CSS funding is not new. The Gadgil-Mukherjee formula, used for central assistance for state plans, saw various iterations. Post-liberalization, the number and financial outlay of CSS grew substantially. The 14th Finance Commission significantly increased the states' share in the divisible pool of central taxes from 32% to 42% (now 41% after J&K reorganization), aiming to give states more untied funds and greater autonomy. This was accompanied by a rationalization of CSS, reducing their number and often revising funding patterns, including increasing the state's share. The 15th Finance Commission continued this trend. The current allegation suggests that despite these reforms, friction persists over the financial burden of specific schemes. Such disagreements can lead to states selectively implementing schemes, demanding more grants-in-aid, or even declining to participate if the financial burden becomes too high. This could result in uneven development across the country and undermine national objectives. Future implications include continued pressure on state finances, potential for political confrontation between Centre and states, and the need for greater transparency and consultation in designing and funding CSS to foster genuine cooperative federalism.