Budget 2015: FM may cut social spending allocation to give states more say in them

Finance Minister Arun Jaitley in Budget 2015 is expected to incorporate Finance Commission's recommendations and cut government allocation for social sector spending by 25-30 percent.

According to an Economic Times report, the Union government is expected to slash its contribution to many Centrally sponsored schemes by 25-30 percent in the upcoming budget.

 Budget 2015: FM may cut social spending allocation to give states more say in them

Union Finance Minister Arun Jaitley. AFP

"In many cases, the Centre's contribution may be reduced from 75% to 50%, in a few others, the Centre could cut its share to 40% and a select few may be fully handed over to the states," a government official was quoted on the topic.

For instance, the agriculture department will face budget estimate cuts of more than 25 percent to Rs 16,650 crore from Rs 22,300 crore. However, the plan size for agriculture will not be altered with states bringing in the rest of the money. Similarly, the human resource development ministry could face a Rs 12,000-crore cut.

The move is being taken with a view to give states a bigger say in the way welfare schemes are implemented and designed. The cut which will be re-compensated through the Finance Commission, is expected to upset the Budget of many states.

According to the report, the finance secretary has already informed the secretaries of various ministries about the changes and compensation plan.

The government currently runs more than 66 sponsored schemes and spends over Rs 2.7 lakh crore annually. Some of the flagship programmes are the Mahatma Gandhi National Rural Employment Guarantee Act, Indira Awas Yojana, Rashtriya Krishi Vikas Yojana, National Rural Drinking Water Programme, National Health Mission, Integrated Child Development Services, Backward Region Grant Fund and Rajiv Gandhi Panchayat Yojana.

However according to the report, Ravi Srivastava, professor of economics at Jawaharlal Nehru University, was critical of the move.

"States were looking forward to higher CSS gross budgetary support going to them as untied grants, but here the opposite seems to be happening. It will have tremendous implications for the poorer states and a lot of schemes will get affected," Srivastava said.

Updated Date: Feb 21, 2015 13:32:53 IST