Constitution’s Seventh Schedule, which differentiates between spending by the Centre and states, needs a re-look | The Indian Express

Constitution’s Seventh Schedule, which differentiates between spending by the Centre and states, needs a re-look | The Indian Express

Written by Bibek Debroy |Updated: September 12, 2019 9:41:06 am

The writer is chairman, Economic Advisory Council to the PM. Views are personal.

Constitution’s Seventh Schedule, which differentiates between spending by the Centre and states, needs a re-look

Why should then there be CSSs for items in the State List (such as health)? If the Union government should contribute for health because it is nationally important, why should states not contribute for defence?

One can argue that revamping a CS is the Union government’s prerogative, while revamping a CSS, without consultation with states, is not.

There are at least three reasons for a discourse on the central sector (CS) and centrally sponsored schemes (CSSs). The difference between a CS and a CSS is that for the former, all expenditure is borne by the Union government. For a CSS, part of the expenditure is borne by the Union government. States bear the rest. The state contribution is contingent on the type of state — north east and Himalayan states versus the others. The first reason for a discussion is that the present CSS basket has an expiry date of March 31, 2020 which is co-terminus with recommendations of the 14th Finance Commission. Therefore, from April 1, 2020, we will have a new CSS basket. Indeed, we need to plan for that CSS basket in advance, since the 2020-21 Union and state budgets will need to factor in the new CSS basket. Procedurally, a CS is somewhat different from a CSS. One can argue that revamping a CS is the Union government’s prerogative, while revamping a CSS, without consultation with states, is not.