Review of Centrally Sponsored Schemes (CSS)
The 16th Finance Commission recommends a high-powered committee to evaluate all CSS, urging closure of programs with inefficient resource use. Despite restructuring in 2015-16, the number of schemes exceeds 80, making up over half of Union transfers to states and about 1.5% of GDP.
Key Observations
- More than 20 ministries run these schemes with almost none discontinued despite reaching objectives.
- Five major schemes — MGNREGA, PM Awas Yojana, Jal Jeevan Mission, Samagra Shiksha, and National Health Mission — comprise over half of CSS spending, needing immediate scrutiny.
Privatization of Power Distribution Utilities (Discoms)
The Commission suggests promoting privatisation of discoms due to recurring losses and debt cycles, recommending shielding private investors from accumulated debts after taking over.
Recommendations
- Create a Special Purpose Vehicle (SPV) to manage working capital and non-asset-backed loans.
- Prepayment or repayment of debt to be eligible under SASCI, offering 50-year interest-free loans for capital investment.
Successful Models
- Gujarat and Haryana models are cited as successful, with improved utility rankings, though Haryana discoms faced recent downgrades.
Fiscal Risks and Subsidies
The Commission flags subsidies and transfers as fiscal risks requiring pruning, emphasizing support to the poor and evidence-based subsidies with positive externalities.
Suggestions
- Systematic review of Union and state schemes to phase out ineffective ones.
- Tighten beneficiary criteria to target intended groups effectively.
Central Public Sector Enterprises (CPSEs)
- About one-third of CAG-audited CPSEs reported losses consistently. Departments must consider closure, privatization, or continuation for enterprises incurring losses three out of four consecutive years.
