The Narendra Modi-led Centre’s big move to increase the state’s share of taxes may end up crippling several crucial schemes related to healthcare, education, child care and irrigation. A closer look at the state budget presented recently indicates how the Centre’s move to stop funding stipulated centrally funded schemes may mean the end of the road for many of them.
The Centre had, accepting the 14th Finance Commission’s recommendations, decided to increase the share of taxes for each state by 10% — from 32% to 42% . However, this increased share came with a rider — the Centre stopped funding several schemes it used to sponsor. It either stopped funding the schemes entirely or reduced funding for others and instead allowed the states to decide where to spend the additional money it received.
This rider has meant that from the National Rural Health Mission to Rashtriya Swasthya Bima Yojana and constructing more anganwadis to treat malnourished children, many important social sector schemes may have taken a major hit.
For instance, 13 schemes relating to childcare under the Women and Child Care Department (WCD) saw a sharp cut of 75% this year. Until last year, the Centre and state would pool together Rs2,846 crore on these schemes, which, in this budget, has been slashed to Rs702 crore. From funding almost Rs2,500 crore of the total Rs2,846 crore, the Centre has decided to fund only Rs388 crore, which is a paltry 15% of its earlier fund amount.
Similar is the case with the Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, which faced a 72% cut in allocation this year, with the Centre retaining only 18% of its original funding.
Such a slash in schemes isn’t entirely because of a financial crunch. The Centre’s devolution of finances means the state is getting Rs7,112 crore more than it had expected to get in last year’s revised estimates. Then what has led to such a slash in budgets? The Centre, while taking away funds from centrally sponsored schemes, gave states more ‘untied’ funds, which allowed each of them to decide its spending priorities.
Neeraj Jain, convenor of Lokayat, a Pune-based non-profit, who analysed the budget for its social sector spending, said the devolution allows states to get away with skewed priorities. “The Centre’s move to give states more funds is only on paper. How is this greater devolution when you are taking away a large amount of funds silently by cutting funding for schemes? The fact that it has decided to end funding and that it is silent even when the state has withdrawn its funding means that both are in consensus that they want to reduce spending on the social sector,” said Jain.
State finance minister Sudhir Mungantiwar, when contacted, said he would provide a detailed explanation on the issue soon.