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NITI Policy Briefs

NITI Aayog takes a major leap forward to ensure transparency and objectivity in devolving CSS funds from the Centre to States

Secretaries of Central Ministries advised to devise an objective formula for distribution of funds to States under Centrally Sponsored Schemes


On April 22nd, the regional consultation on the Task Force for Poverty Elimination, for Western and Northern States/UTS, was held in Jaipur. Gujarat, Maharashtra, Rajasthan, Punjab, Haryana, Daman & Diu and Dadra & Nagar Haveli were part of this consultation.


February 5th, 2016: In line with the recommendation of the Sub-Group of Chief Minister for Rationalizing Centrally Sponsored Schemes, the NITI Aayog has called for the creation of an objective and transparent formula to distribute Central funds to States, under the Centrally Sponsored Schemes (CSS).


The NITI Aayog has written to Secretaries of Central Ministries/Departments calling for prompt action to develop an objective formula for distribution of CSS funds.


“It would be pertinent to point out that the budget making exercise for 2016-17 is in full swing both at the Union and many State Government Levels. It would be entirely appropriate that State Governments have a broad appreciation of the quantum of Central funds that is committed to them scheme-wise, in order for them to plan better and also ensure speedier execution of CSS,” NITI wrote in the letter addressed to Secretaries of all nodal Ministries.


The task of creating the formula has been entrusted to a three-member committee with the Secretary of the nodal Ministry implementing the CSS as the Chairman, and the Financial Adviser of the Ministry and Adviser of the NITI Aayog as its Members. NITI will give its inputs and recommendations based on consultation with all State Governments.


Ministries have so far had the flexibility to swap funds between States depending on various criteria. The creation of a formula, however, will ensure transparency in allocation, while creating an objective and timely method for speedy action by States. With prior knowledge of funds that will be allotted to them under each CSS, States can allocate funds to corresponding sectors in their budgets accordingly, without having to wait for the release of the Union Budget.


The decision reflects NITI Aayog’s commitment to cooperative federalism. Through this, the Aayog has ensured direct involvement of States in national policy making, cutting across party lines.