There are several developmental initiatives at the state level that the Union government supports. The aim of these schemes is to supplement efforts made by the state governments since the central government has more resources at its disposal. The government schemes are divided into two categories, that is centrally sponsored schemes and central sector schemes. Let us look at some of the details surrounding the two types of schemes.
Central Sector Schemes
The schemes that are entirely and directly funded by the central government are known as central sector schemes. The schemes are formulated by the central government based on subjects from the union list. Although there are some schemes that are implemented only in the states, their funding comes from the central government.
Some examples of central sector schemes include Bharatnet, Namami Gange-National Ganga Plan, Crop Insurance scheme, LPG connection to poor households, family welfare schemes, recapitalization of public sector banks, Pradhan Mantri Mudra Yojana and many others.
Centrally Sponsored Schemes
On the other hand, centrally sponsored schemes are funded partially by the state governments and partially by the central government. These schemes are basically the way in which the central government helps the states run their plans financially. While a certain percentage of the funding rests with the state government, the rest of it comes from the central government. The amount of state participation varies depending on the state. Sometimes, the required funds are directly transferred to the state by the central government ministries. The implementation of these centrally sponsored schemes is made under the union territory or state government. The schemes are created in areas that are covered by the state governments.
All of these schemes are divided into three categories; the core of the core, core and optional. The state participates in all of the schemes financially. The degree of participation and the share coming in from each state differs depending on the scheme. Geographically difficult states get a higher percentage of funding by the central government.
- The core of the core schemes: These schemes comprise six umbrella schemes. The core of the core schemes retains its expenditure allocation frameworks after restructuring. Most of these schemes prescribe a certain amount of financial participation by the states. For example, in the case of MGNREGA, state governments have to incur 25% material expenditure. Other examples of such schemes are the National Social Assistance Programme (Department of Rural Development), Umbrella Programme for web Development of Scheduled Tribes (Ministry of Tribal Affairs).
- Core Schemes: The funding for core schemes has a 60:40 ratio where more funding comes from the central government. In case of difficult states like the northeastern states and Kashmir, the pattern followed is more along the lines of a 90:10 ratio, where most of the finances are incurred by the central government. Some examples of these schemes are a green revolution, a white revolution and a blue revolution.
- Optional Schemes: For optional schemes, the ratio is 50:50, In these cases, states have the freedom to decide. Although, according to the budget of 2017, there are no optional schemes.