The Centre is expected to meet a key demand of the state governments including Gujarat chief minister Narendra Modi this week by allowing states to spend 10% of the funds given under Centrally Sponsored Schemes (CCS) as per their wish.
The Planning Commission has got go-ahead from a Group of Ministers on restructuring of the CCS and allowing 10% of around Rs 1,85,000 given to states every year under the schemes as flexi-funds.
The Union Cabinet is expected to consider the proposal on Thursday.
According to officials, the flexi-fund will be used as incentive to the state governments to make innovation in Central schemes as per local needs.
“We want the states to think out of box and innovate,” a senior plan panel functionary said.
Many states have complained that they cannot use Pradhan Mantri Gramin Sadak Yojana money for building bridges longer than 50 meters as it is prohibited by the scheme guidelines.
Punjab had cited the guidelines as a hindrance to improve rural roads in the states.
Once the Cabinet approves restructured CCS to be implemented from next financial year, the panel expects such bottlenecks to be removed.
A committee of secretaries will consider having a state specific guideline for CCS, whose number would be reduced from 147 to 70.
Reduction in number of schemes, the panel officials say, would provide Central government ministries flexibility in providing money for development as per requirement of the states.
“If one state wants more money for livestock and another for horticulture it would be possible in the new format,” the official said.
The panel believes that it was a good start to modify central spending as per needs of the state governments and expected further improvement in CCS in coming years.