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Published: 12th Jul, 2019

India has the largest number of hungry people in the world. Despite various programs the number of undernourished people today is same as 20 years ago.

Hunger remains the No.1 cause of death in the world. Over 10 million people die every year of chronic hunger and hunger-related diseases, of which a quarter deaths take place in India. In comparison, less than 10 percent death is claimed by earthquakes, floods, droughts and wars which get the most media attention.

There are 900 million chronically hungry people in the world; one-third of them live in India. Almost 50 percent of Indian children are underweight, 30% of newborn have low weight at birth, and over 55% of married women and about 80% of young babies in the age group 6 - 35 months are anemic.

The problem of malnutrition is complex, multi-dimensional and inter-generational in nature. The varied causes include inadequate consumption of food, frequent infections, lack of availability of safe drinking water and proper  sanitation, illiteracy specially in women, poor access to health services, low purchasing power, socio-cultural factors such as early marriages of girls, lack of care during pregnancy and infancy,  ignorance about nutritional needs of infants and young children, etc.

Thus , to improve the health conditions and provide food grains to common people at affordable prices, the universal Public Distribution System (PDS) was introduced in India in 1965. It also served the aim of (a) maintaining stability in the prices of essential commodities across regions and (b) keeping a check on private trade, hoarding and black-marketing.

In the mid-nineties the central government begun to see the PDS program as a tool to provide food security to the poor. In 1997, the PDS was converted into Targeted PDS (TPDS) through classification of its population into Above Poverty Line (APL) and Below Poverty Line (BPL) categories. Only those households classified as BPL were made eligible for subsidized purchase of commodities from the ration shops. Since early 2000, it has also recognized the destitute as a separate category among the poor. All this has culminated in food-based security as an entitlement.

But due to poor governance, nothing materialized on the ground. The food crisis is not due to lack of sufficient food grain production, but largely a reflection of government’s misplaced priorities and mismanagement skills.

Thus to improve the food security situation in India National Food Security Act has been promulgated.

The Act provides for coverage of up to 75% of the rural population and up to 50% of the urban population for receiving subsidized food grains under Targeted Public Distribution System (TPDS), thus covering about two-thirds of the population. Under the Act, the eligible persons will be entitled to receive 5 kgs of food grains per person per month at subsidized prices of Rs. 3/2/1 per Kg for rice/wheat/coarse grains.

To ensure the food security of poorest of poor, the existing Antyodaya Anna Yojana (AAY) households will continue to receive 35 Kgs of foodgrains per household per month. Pregnant women and lactating mothers are entitled to a nutritious "take home ration" of 600 Calories, 18-20 grams of protein and a maternity benefit of at least Rs 6,000 for six months; Children 6 months to 14 years of age are to receive free hot meals or "take home rations".

The Central Government will be responsible to provide funds to states in case of short supplies of food grains; the states are responsible for determining eligibility criteria & will provide a food security allowance to the beneficiaries in case of non-supply of food grains.

In order to address the concern of the States regarding additional financial burden, Central Government will provide assistance to the States towards cost of intra-State transportation, handling of foodgrains and FPS dealers’ margin, for which norms will be developed. This will ensure timely transportation and efficient handling of food grains.

The Public Distribution System is to be reformed like doorstep delivery of foodgrains, application of information and communication technology (ICT) including end to end computerisation, leveraging ‘Aadhaar’ for unique identification of beneficiaries, diversification of commodities under TPDS etc for effective implementation of the Food Security Act. Some of these reforms are already underway.

The eldest woman in the household, 18 years or above, is the head of the household for the issuance of the ration card;There will be state- and district-level redress mechanisms; and State Food Commissions will be formed for implementation and monitoring of the provisions of the Act. Provisions have also been made for disclosure of records relating to PDS, social audits and setting up of Vigilance Committees in order to ensure transparency and accountability. The cost of the implementation is estimated to be $22 billion(1.25 lac crore), approximately 1.5% of GDP.

Other Welfare Schemes under NFSA 2013

The Act contains entitlements for meal to pregnant women and lactating mothers and for children up to 14 years of age, through the ongoing ICDS and MDM schemes. The MDM scheme provides hot cooked meals to all children (10.54 crore children in 2011-12) attending classes I-VIII in government and government aided-schools, Education Guarantee Scheme/Alternative and Innovative Education Centres (EGS/AIE). This scheme is run primarily with a view to enhance enrolment, retention, attendance and to also improve nutritional levels among primary school students. The Wheat Based Nutrition Programme (WBNP), run under the ICDS, is implemented by the Ministry of Women and Child Development, which provides nutritious/energy food to children below the age of six years and to expectant/lactating women. Even though the scheme is referred to as a wheat-based nutrition scheme, more than 30 per cent of grains allocated to this scheme are in terms of rice.

Latest Initiatives by the Governments

  • Recently Kerala and Tamil Nadu have also rolled out the NFSA from November. With this, now the Act has been implemented in all the States and Union Territories. As a result, 81.34 crore persons will get wheat at Rs. 2 per kg and rice at Rs. 3 per kg.
  • Center is now focusing on further reforms in PDS, which will include end to end computerization of the system for which States/UTs are being technically and financially assisted. It is important for bringing in transparency in the functioning of the public distribution system (PDS), which is vital feature of NFSA, in order to check leakages and diversion of foodgrains.
  • The beneficiary’s data base has been digitized in all the 36 States/UTs, wherein, information is available right upto beneficiary level and is in the public domain.
  • Online allocation of foodgrains in being done in 28 States/UTs, and the entire foodgrain supply chain has been computerized in 18 States/UTs.
  • Food Grains losses of FCI have been brought down to 0.04 percent and major FCI depots have been made online
  • In another significant step towards better targeting and leakage-free distribution of foodgrains, direct benefit transfer is being carried out in two different modes. In the first mode, food subsidy is being transferred in cash into the bank account of beneficiaries, who then have the choice to buy foodgrains from the open market.
  • The second mode involves automation of fair price shops, for distribution of foodgrains through an electronic point of sale (e-PoS) device which authenticates beneficiaries at the time of distribution and also electronically captures the quantum of foodgrains distributed to the family. As of 31.10.2016, e-PoS devices are operational in 1,61,854 fair price shops.

Supreme Courts review of the Act

  • The Supreme Court said that National Food Security Act 2013 has not been implemented properly, and legislation enacted by parliament for citizens' benefit was kept on the low priority by various states. 
  • Almost four years have gone by since the Act was enacted, but the authorities and bodies mandated to be set up under it have not been made functional yet in some states, and this reflects the poor compliance of the provisions.
  • Many of the state governments have not yet established a working state food commission which is a clear indication that there is hardly any commitment to the implementation of the NFS (National Food Security) Act.


The ultimate objective of development planning is human development or to increase social welfare and well-being of the people. Increased social welfare of the people requires a more equitable distribution of development benefits along with better living environment.

NFSA gives a legal character to per person entitlement. In the case of non-supply of the entitlement, the centre commits to giving a food security allowance. Based on population coverage and the distribution commitment, TPDS forms the largest component of the NFSA. There are two types of TPDS beneficiaries under NFSA – namely Antyodaya (AAY or the poorest-of-poor) and priority – who are entitled to 35 kg/family/month and to 5 kg/person/month of grain respectively. Rice, wheat and coarse cereals are to be distributed at the central issue prices (CIPs) of Rs 3/2/1 per kg respectively.

Providing food security to all can be a step forward towards inclusive growth.




Improved governance requires an integrated, long-term strategy built upon cooperation between government and citizens. This requires proper design of policies keeping all stakeholders benefits in mind alongwith proper implementation of programmes and policies at the ground level. 

Thus the critical element of governance is policy making: how to design policy for problems in society, and how to manage the most complex policy phase, namely that of implementation?

A. Public policy making

Public policy making is the principal function of the state. Public policy making is a complex, dynamic process whose components make different contributions to it. It decides major guidelines for action directed at the future, mainly by the governmental organs. These guidelines [policies] formally aim at achieving what is in the public interest by the best possible means. Public policy can be authoritative allocation of values by the political system, a slight variation from the previous or existing policy, equilibrium reached out of the competing group struggle, a rational choice or the preference of the governing elite.

Some of the agencies: which take part in policy formulation are legislature, cabinet, state governments, civil servants, judiciary, boards and commissions mass media, political parties, pressure groups and public. It is essential to examine the role of these agencies in the formulation of an educational policy in India.

Issues in policy making in India

  • Excessive Fragmentation in Thinking and Action

One of the main problems with policy-making in India is extreme fragmentation in the structure. Such fragmentation fails to recognize that actions taken in one sector have serious implications on another and may work at cross purposes with the policies of the other sector. Besides, it becomes very difficult, even for closely related sectors, to align their policies in accordance with a common overall agenda.

  • Excessive overlap between policy making and implementation

Another problem is the excessive overlap between implementation, program formulation and policy making which creates a tendency to focus on operational convenience rather than on public needs. Policy-making in Indian ministries occurs at the levels of Director and above, but the most important level is that of the Secretaries to the Government of India, who are their Ministers’ “policy, advisers-in-chief”. However, Secretaries spend a large part of their time bogged down on routine day-to-day administration of existing policy. Time is spent anticipating and answering parliamentary questions, attending meetings and functions on implementation issues etc. The result is that sub-optimal policies, where adequate attention has not been paid to citizen needs, tend to emerge.

  • Lack of non-governmental inputs and informed debate

Often public policy is made without adequate input from outside government and without adequate debate on the issues involved. The best expertise in many sectors lies outside the Government. Yet the policy processes and structures of Government have no systematic means for obtaining outside inputs, for involving those affected by policies or for debating alternatives and their impacts on different groups. Most developed countries have a system of widespread public debate before a policy is approved.

  • Lack of systematic analysis and integration prior to policy-making

Policy decisions are often made without adequate analysis of costs, benefits, trade-offs and consequences. There are several underlying causes for this:-

I. Fragmentation has led to a widespread prevalence of the ‘blind men and the elephant’ syndrome in policy-making.
II. Inadequate time spent on policy-making, mainly due to excessive overlap of policy-making and implementation and to over-centralisation of implementation authority (discussed above).
III. Inadequate professionalism of policy-makers and advisers
IV. Inadequate consultation of in-house specialists.
V. Mediocrity of in-house specialists: While there are many outstanding specialists working for the Government, there is a widespread feeling that many in-house specialists are not on top of their specialisms. This perception of mediocrity vis-à-vis outside experts tends to worsen the problem of inadequate consultation of even the good in-house specialists who get tarred with the same brush. It also promotes an undue respect for outside specialists and the error of accepting poorly formulated prescriptions from outsiders simply because they have a more professional or expert image.

B.Policy implementation

Implementation is the heart of administration as it consists of carrying out of basic policy decisions. In the policy cycle, it is critical to the successful fulfillment of policy objectives. But implementation is not automatic. The implementation phase is faced with numerous problems. Effective implementation requires a chain of command, and the capacity to coordinate and control; often there are shortfalls in this exercise, more so in a developing country like India.

In India there has been a dramatic rise in expenditure on programmes of social inclusion in the last five years but this is accompanied by growing complaints about implementation. The weaker sections of the society, for whom these schemes are primarily intended, are often not able to benefit because they are not sufficiently empowered to access the benefits due to them. This is despite the fact that there have been a number of legislations aimed at securing legally guaranteed rights to the Indian people, through the Right to Information Act, the Forest Rights Act, the Right to Education Act, the= Mahatma Gandhi National Rural Employment Guarantee Act and the soon to be introduced National Food Security Act. 

Part of the problem is that the enactment of right based schemes in an environment of illiteracy and lack of awareness and empowerment does not ensure that people will claim their rights. However, it is also true that the schemes continue to be implemented in a business-as-usual mode, while what is demanded by these programmes is an innovative break with the past. Without reforms in implementation structures, schemes aimed at social inclusion will continue to be afflicted by the poor quality syndrome.

For example: 

  • In MGNREGA a draft report by the Comptroller and Auditor General reveals that on average only 3.2 per cent of registered households could avail of 100 days 'guaranteed' work. The average employment under MGNREGA was just 18 days. Due to Administrative deficiencies adequate work has not been accurately calculated for the local workforce. Gaps may result in a lapse of several days between short-term jobs, and there are currently limited projects with the longer-term potential to sustain a village's workforce. Shortages have led not only to “touting” of work, but also pockets where minimum wage is not being provided. This problem is exacerbated when monitoring is ineffective or absent.
  • In implementation Right to Education Public schools suffer from high rates of teacher absenteeism and unfilled posts, lack of resources, deficiencies in basic infrastructure, as well as an overall decline in the number of schools being established that bears no relation to rises in population.

Most schemes follow a blue print and top-down approach, with little flexibility given to field staff. Any change in the scheme requires approval from GOI which is time consuming. Uniformity of schemes all over the country from Mizoram to Kerala, without sufficient delegation to states to change the schemes to suit local conditions, leads to a situation where the states even knowing that the scheme is not doing well become indifferent to its implementation.

Many states are ruled by a political party different from that at the Centre. These governments do not put their weight behind CSSs formulated by the Union Government as they see no political advantage in successful implementation of such schemes. The successful implementation of social sector schemes requires a high degree of political commitment (mid-day meal scheme of Tamil Nadu, EGS in Maharashtra, Antyodaya in Rajasthan, and two rupee rice in Andhra are examples) and administrative coordination, which GOI cannot secure for want of control over the staff.

Routine has taken over the functioning of government at all levels. Little time is left for officers to initiate reforms or change schemes. With the best of commitment it often takes two years to get a scheme changed. In the meantime the officer gets transferred, and his efforts come to naught. Perception of short tenure dampens the enthusiasm to undertake reforms. Many schemes assume a highly committed delivery machinery which will act as ‘friend, philosopher and guide’ of the people. Even if such rare individuals existed in government they do not stay at a particular post for a long time to make lasting impact. Incentive structure is also weak.

Models proposed for reforming governance is Good Governance Model

Good governance helps create an environment in which sustained economic growth becomes achievable. Conditions of good governance allow citizens to maximize their returns on investment.

Good governance does not occur by chance. It must be demanded by citizens and nourished explicitly and consciously by the nation state. It is, therefore, necessary that the citizens are allowed to participate freely, openly and fully in the political process. The citizens must have the right to compete for office, form political party and enjoy fundamental rights and civil liberty. Good governance is accordingly associated with accountable political leadership, enlightened policy-making and a civil service imbued with a professional ethos. The presence of a strong civil society including a free press and independent judiciary are pre-conditions for good governance.

Thus for proper implementation of programmes and policies effectiveness, efficiency, equity in formulation and implementation is needed.


India is passing through the phase of demographic transition which could be the biggest opportunity or the biggest concern of the country depending upon the utilization of its huge work force. India adds 12 million people to its workforce annually, but very few have any formal skill training. Today, less than four per cent of the Indian workforce is skilled, in contrast to the 42 per cent in US, 76 per cent in Germany, 80 per cent in Japan and 96 per cent in South Korea. Our workforce readiness is one of the lowest in the world and a large chunk of existing training infrastructure is irrelevant to industry needs. Without proper skills this huge youth population would be a demographic liability instead of demographic dividend, However, this could change if we reach out to more people with quality learning opportunities, revamp our existing infrastructure and execute plans more efficiently by making better use of monetary and resource support available.

Skills and knowledge are the driving forces of economic growth and social development for any country. Countries with higher and better levels of skills adjust more effectively to the challenges and opportunities of world of work. India is facing several skill development issues which are hampering its’ progress & economic growth.

Why India needs Skill Development?

In the words of the Mahatma,“The brain must be educated through the hand. The teacher must learn the craft and correlate his knowledge to the craft. The craft cannot be separated from education.”

A. Demographic Dividend:

1. Demographic dividend does not mean just people; it means skilled, educated or employed people.
2. The ‘demographic window’ is only a span of few decades. The skilled youth is required to save demographic dividend from becoming demographic disaster.
3. It is worth mentioning here that India has 54 per cent of its total population below 25 years of age. Over the next 20 years, the labour force in the industrialised world is expected to decline by 4 per cent, while in India it will increase by 32 per cent who are not sufficiently skilled and employable.
4. A conservative estimated figure shows that 104.62 million fresh entrants to the workforce need to be skilled by 2022 in addition to the 298.25 million working persons needing skill training.

B. Sectoral mobilization:

1. Less number of people will be required to work in farming as productivity improves. This would result in sectoral mobilization of workforce from agriculture to secondary and tertiary activities.
2. Skills are the bridge between good jobs and the workforce .Setting standards and quality of training is a pre requisite for skilling and its utilization.

C. New schemes:

1. Only a skilled workforce would lead to the success of initiatives like Make in India and Digital India and smart cities.

D. Skill Capital of World:

1. To convert this vision into reality, India needs to create a skilled and productive workforce matching international standards of quality and productivity through integration of skills and training along with education.

E. Better Employment:

1. Skills are needed to those currently in colleges for them to be better employed.

F. Skill availability and accessibility to avenues for successful ventures can enhance the livelihoods of many.

Objectives of ‘Skill India’

The main goal is to create opportunities, space and scope for the development of the talents of the Indian youth and to develop more of those sectors which have already been put under skill development for the last so many years and also to identify new sectors for skill development. The new programme aims at providing training and skill development to 500 million youth of our country by 2020, covering each and every village. Various schemes are also proposed to achieve this objective.

Features of ‘Skill India ‘

The emphasis is to skill the youths in such a way so that they get employment and also improve entrepreneurship. Provides training, support and guidance for all occupations that were of traditional type like carpenters, cobblers, welders, blacksmiths, masons, nurses, tailors, weavers etc. More emphasis will be given on new areas like real estate, construction, transportation, textile, gem industry, jewellery designing, banking, tourism and various other sectors, where skill development is inadequate or nil.

The training programmes would be on the lines of international level so that the youths of our country can not only meet the domestic demands but also of other countries like the US, Japan, China, Germany, Russia and those in the West Asia. Another remarkable feature of the ‘Skill India’ programme would be to create a hallmark called ‘Rural India Skill’, so as to standardise and certify the training process.

Tailor-made, need-based programmes would be initiated for specific age groups which can be like language and communication skills, life and positive thinking skills, personality development skills, management skills, behavioural skills, including job and employability skills.

Programme seeks to create an end-to-end implementation framework for skill development, which provides opportunities for life-long learning. This includes incorporation of skilling in the school curriculum, providing opportunities for quality long and short-term skill training, by providing gainful employment and ensuring career progression that meets the aspirations of trainees.

It will align employer/industry demand and workforce productivity with trainees’ aspirations for sustainable livelihoods, by creating a framework for outcome focused training.
It will build capacity for skill development in critical un-organized sectors (such as the construction sector, where there few opportunities for skill training) and provide pathways for re-skilling and up-skilling workers in these identified sectors, to enable them to transition into formal sector employment.

It also seeks to develop a network of quality instructors/trainers in the skill development ecosystem by establishing high quality teacher training institutions. Maintain a national database, known as the Labour Market Information System (LMIS), which will act as a portal for matching the demand and supply of skilled workforce in the country.

The course methodology of ‘Skill India’ would be innovative, which would include games, group discussions, brainstorming sessions, practical experiences, case studies etc.

However, a government-appointed panel has found that the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) – spent over Rs 1,500 crore in skilling over 18 lakh people but failed to achieve key objectives. . This puts in context the various facets of this flagship mission and the various issues concerned with it along with way forward.

Issues in implementation of Skill India Mission:

• The targets allocated to them were very high and without regard to any sectoral requirement. Everybody was chasing numbers without providing employment to the youth or meeting sectoral industry needs.
• No evaluation was conducted of PMKVY 2015 (the first version of the scheme) to find out the outcomes of the scheme and whether it was serving the twin purpose of providing employment to youth and meeting the skill needs of the industry before launching such an ambitious scheme.
• The focus of PMKVY has been largely on the short-term skill courses, resulting in low placements. There has been an over emphasis on this scheme and hence it is seen as the answer to all skill-related issues.
• The Comptroller and Auditor General (CAG) have pointed out flaws in the design and operations of the NSDC and National Skill Development Fund which has resulted in falling short of skill development goals. Majority of them also could not achieve the placement targets for the trained persons.
• The Sharada Prasad Committee, held the NSDC responsible for poor implementation of the Standard Training Assessment and Reward (STAR) programme. It highlighted that only 8.5 per cent of the persons trained were able to get employment. That is what has been claimed by NSDC.
• The government report has found fault with the STAR scheme on several counts. STAR offered school dropouts financial incentives to acquire new skills, but the report said that “of those who got their results, only 24% have received certificates and less than 18% have received monetary rewards. This is despite the fact that 80% candidates reported having bank accounts, and 91.3% stated they had Aadhaar numbers”.
• The Report also cites “serious conflict of interests” in the functioning of the National Skill Development Corporation.
• NSDC has not been able to discharge its responsibilities for setting up sector skill councils (SSCs) owing to lots of instances of serious conflict of interest and unethical practices.
• As per its original mandate, the NSDC should be mobilizing resources for skill development from the industry, financial institutions, multilateral and bilateral external aid agencies, private equity providers and ministries and departments of the central government and states. But the committee said found that the NSDC did not follow any standard criteria for creation of SSCs which not only increased their number but created overlapping jurisdictions.
• Another concern that arose was that the targets allocated to them were very high and without regard to any sectoral requirement. Everybody was chasing numbers without providing employment to the youth or meeting sectoral industry needs.
• There have been apprehensions on how many of the 11.7 million trained in the past two years are really in jobs.


It is a path that needs to be treading carefully as it involves the future of our youth. Steps needed are:
• We need to have a holistic approach to vocational education and skill development by having a defined approach for both short-term and long-term training courses to meet the objectives of the Skill India programme.
• In respect of NSRD's activities i.e. core research, evaluation, data analytics and international partnerships need efficient handling, as a mere collection of raw data on various repositories may not portray the proper insights or serve any purpose.
• Merely sharing with the international expert or just importing overseas concepts followed in developed nation may not fetch us with any desired goal, but a clear understanding of trends in national economy, demographic parameters, heritage, culture and tradition(region-wise) and aspiration of people and other relevant indicators are essential before correlating the same for formulating new skilling strategies.
• More and more Indian Skill Development Services officers are to be recruited to work in the frontline administration, instead of engaging other services officers who do not possess the technical expertise vis-à-vis industry experience to supervise the skill development process in the country. ISDS service needs to be extended to the State's training directorates also.
• In NSDA for core research and data analytics job, a collaboration of core experts (from relevant occupations) with statistician and data analysts would probably fetch desirable outcome based on an in-depth understanding of futuristic direction.
• Establishing a Skill Development University to offer specialized degree programs which will provide advance skills.
• Online learning system could be utilized to impart skill/craft along with using fixed infrastructure. An open platform for e-content on skill development should be created where content can be crowd source.
• It is important to vocationalize the current education system by developing curricula in the lines with industry needs, creating infrastructure for skill training, involving the industry in all aspects of curricula development, training delivery, student assessments and creating a model where students can obtain skills and at the same time get a degree.
• Skills on Wheel type initiatives could be used to address infrastructure and transport constraints. There are shining examples of Skill Trucks operated in Brazil that take skills training to the rural, remote parts of the country.
• There should be increasing role of industry in all aspects of vocational training – providing latest machinery for training, governance, providing trainers from industry and doing assessment to ensure quality at each stage. Industry should emphasize on formal vocational training and certification at the time of hiring and for career advancement.
• Creating standard curricula and assessment across various agencies offering vocational courses. Formal training programs for vocational faculty and trainers so that they understand this pedagogy.
Skill development alone is not sufficient to address the unemployment problem; there is need for availability of job opportunities for those skills. It is not the time to produce people with skill training certificates; rather we need to produce people who are actually employable. For the people with skill certificates the industry must give a premium and preference to that certificate while hiring. If industry does not show traction towards this the entire ecosystem won’t be complete. We need to bring industries to the forefront of skill development rather than creating centres of skill development across India.

For any skill development effort to succeed, markets and industry need to play a large role in determining courses, curriculum and relevance. For this, employers need to be put in the driving seat, with the government acting as a regulator and not the implementer.

The government has its task cut out. What is needed is a willingness to act, and to take the difficult decisions that can help realise the ‘Skill India’ dream.

Financial inclusion is delivery of financial services at an affordable cost to the vast sections of the disadvantaged and low-income groups, providing them with timely and adequate access to the financial products, services like Bank Accounts, Savings Products, Remittances & Payment services, Insurance, advisory services, Entrepreneurial and Micro credit, Micro finance.

“Financial Inclusion” is the way the Governments strive to take the common man along by bringing them into the formal channel of economy thereby ensuring that even the person standing in the last is not left out from the benefits of the economic growth and is added in the mainstream economy thereby encouraging the poor person to save, safely invest in various financial products and to borrow from the formal channel when he need to borrow.

NSSO data reveal that 45.9 million farmer households in the country (51.4%), out of a total of 89.3 million households do not access credit, either from institutional or non-institutional sources. Further, despite the vast network of bank branches, only 27% of total farm households are indebted to formal sources (of which one-third also borrow from informal sources).  Thus to improve the financial inclusion in India government has launched Pradhan Mantri Jan-Dhan Yojana.

It is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

Account can be opened in any bank branch or Business Correspondent (Bank Mitr) outlet. PMJDY accounts are being opened with Zero balance. However, if the account-holder wishes to get cheque book, he/she will have to fulfill minimum balance criteria.

The mission mode objective of the PMJDY consists of 6 pillars. During the 1st year of implementation under Phase I (15th August, 2014-14th August,2015), three Pillars namely:

(1) Universal access to banking facilities

(2) Financial Literacy Programme and

(3) Providing Basic Banking Accounts with overdraft facility of Rs.5000 after six months and RuPay Debit card with inbuilt accident insurance cover of Rs 1 lakh and RuPay Kisan card, will be implemented.

Phase II, beginning from 15th August 2015 upto15th August, 2018 will address:

(1) Creation of Credit  Guarantee Fund   for coverage of defaults in overdraft  A/Cs

(2)  Micro Insurance and

(3)  Unorganized sector Pension schemes like Swalamban. 

In addition, in this phase coverage of households in hilly, tribal and difficult areas would be carried out. Moreover, this phase would focus on coverage of remaining adults in the households and students.

The implementation strategy of the plan is to utilize the existing banking infrastructure as well as expand the same to cover all households. While the existing banking network would be fully geared up to open bank accounts of the uncovered households in both rural and urban areas, the banking sector would also be expanding itself to set up an additional 50,000 Business correspondents (BCs), more than 7000 branches and more than 20000 new ATMs in the first phase .

In the past experience large number of accounts opened remained dormant, resulting in costs incurred for banks and no benefits to the beneficiaries.  The plan, therefore, proposes to channel all Government benefits (from Centre/State/Local body) to the beneficiaries to such accounts and pushing the Direct Benefits Transfer (DBT) scheme of the Union Government including restarting the DBT in LPG scheme.  MGNREGS sponsored by Ministry of Rural Development (MoRD, GoI) is also likely to be included in Direct Benefit Transfer scheme.

Impact of Jan Dhan Yojana

  • For Common Man
  1. Anyone who does not have an account will get an account in bank.
  2. Common man will get direct benefit of government subsidies.
  3. Common man will also have a financial and credit history on government records.
  4. It will be easy to get loan directly from financial institutions instead of other modes that charge heavy interest rate.
  • For Business
  1. More and more people will be doing shopping via debit cards reducing time, manpower and risk involved in managing cash transactions.
  2. More relevant data will be available to perform various analyses to create marketing plans.
  • For Government
  1. It will be a great milestone achieved after linking with Aadhaar card to make direct financial transactions, subsidies transfer and lot more.
  2. It will be easy to monitor transactions and collect financial data as more people will be using recorded mode of payments.
  • For Banking Institutions
  1. Banks will get new customers that directly means more money inflow.
  2. These customers may result in potential clients for other banking services like loans.
  3. Further, PMJDY promotes differential banking, allowing new entrants to innovate without the legacy constraints older banks might face. It was envisioned that PMJDY would account for social-security errors, alleviate the problem of asymmetric information via cashless payments, and tackle black money.

Achievements under PMJDY (as on 21st December,2016)

(i)     26.03 crore accounts have been opened under PMJDY out of which 15.86 crore accounts are in rural areas and 10.17 crore in urban areas. 

(ii)   Deposits of Rs. 71,557.90 crore has been mobilized.

(iii)  19.93 crore RuPay Debit cards have been issued under PMJDY.

(iv)  Aadhaar seeding in PMJDY accounts 14.43 crore

(v)   Zero balance accounts has been reduced to 23.86%

(vi)  Household Coverage: 99.99% households out of the 21.22 crore households surveyed have been covered under PMJDY.

 As on 23rd December, 2016, out of total requirement of 1,27,198 fixed location Bank Mitras in Sub Service Areas (SSAs), 1,26,985 Bank Mitras  have been deployed  by banks.

Overdraft (OD) in PMJDY accounts: As on 23rd December, 2016, 44.28 lakh accounts have been sanctioned OD facility  of which 23.85 lakh account-holders  have  availed  this  facility involving an amount of Rs.316.56 crore.

Insurance Claims settled

(i)     As on 23rd December, 2016, out of 1712 claims lodged, 1626 claims have been disposed off under accidental insurance cover of Rs. 1 lakh under RuPay debit card .

(ii)   As on 23rd December, 2016, out of 3936 claim lodged, 3421 claims paid under  Life Cover of Rs.30,000/- to those beneficiaries who opened their accounts for the first time from  15.08.2014 to 31.01.2015.

Challenges before Jan Dhan Yojana

JDY relies heavily on the BC model for expanding the banking network in both the rural and urban areas. One of the primary reasons behind the unsatisfactory performance of the BC model is the poor remuneration (Rs 2000-3000 per month) paid to business correspondents.

For such a meager amount, it is unfair to expect a BC to visit villages or slums at regular intervals, open new bank accounts for the poor people, process financial trans-actions, educate customers about banking services and answer all queries of the customers. Under the JDY, the BCs will get a minimum compensation of Rs.5000 per month.

There are several other important factors which act as a barrier in the delivery of banking services through the BC model. Some of these factors include

  • Inordinate delay in issuing smart cards to customers (three to six months);
  •  Limited utility of smart cards as services such as remittance are not loaded;
  • Inadequate cash handling limit given to bcs;
  • Devices not working properly due to technical problems or poor network connectivity;
  •  Lack of trust in bcs;
  • Lack of customer-centric banking products and services;
  • Poor governance and inadequate supervision of bcs;
  • Absence of a comprehensive strategy for financial education.

The expanded financial architecture will need personnel, which is lacking, and could be important supply side deficit. Banks have been advised under the PMJDY to open 200 accounts a day in each of their existing rural branches, but they are wary, as the existing infrastructure in those branches cannot handle the extra load.

Therefore, banking reach should be increased gradually and along with the capacity of banking infrastructure, so that the customer base at any time can be serviced well and the system is not pressurized at any time.

Other ambiguities and problems with the scheme and suggestions to tackle them are:

  • People may open multiple accounts using different ID proofs on the lure of getting insurance covers. Monitoring has to be done in this regard. All banks must have a centralised information sharing system so that this loophole can be countered.
  • If a bank is being set up, it must be set up at a place with road connectivity and must be situated at the heart of the villages and towns, especially at areas where trade .It is necessary that the bank also fulfills its other purposes such that it is viable as well as profitable to operate in a given area.
  • Even if it is a zero balance account, credibility of the account holder has to be checked. The Overdraft facility to the account holder may turn into a sub-standard or Non- Performing Asset for the banker. Thus, credit should be made available by the banker only after due diligence and not by just going by the scheme.
  • The financial literacy centre is to be held by the banker so as to keep customer aware of the services available and when and how to use them and to keep them updated of the new financial products available to her/him.

Apart from th above stated issues, privacy and security issues have cropped up, new light is shed on the scheme’s susceptibility to frauds, and ‘present bias’ is increasingly being examined, i.e. whether the number of bank accounts opened are actually being used. Additionally, several features of the scheme remain ambiguous. For instance, the promising overdraft facility is left to the discretion of banks, which creates prejudices as banks will avoid such situations that could potentially lead to NPAs.


Financial inclusion cannot be achieved only by meeting the target numbers. The RBI Governor, Raghuram Rajan had cautioned banks on the risks involved in just hunting for number with regard to Jan-Dhan Scheme, asking them not to compromise on core objective of the programme. ”When we roll out the scheme, we have to make sure it does not go off the track. The target is universality, not just speed and numbers.” The scheme can be a “waste” if it leads to duplication of accounts, if no transaction happens on the new accounts and if the new users get bad experiences.



The World Health Organization states that: Sanitation generally refers to the provision of facilities and services for the safe disposal of human urine and feces. Inadequate sanitation is a major cause of disease world-wide and improving sanitation is known to have a significant beneficial impact on health both in households and across communities. The word 'sanitation' also refers to the maintenance of hygienic conditions, through services such as garbage collection and wastewater disposal.

Inadequate sanitation is a major cause of disease world-wide and improving sanitation is known to have a significant beneficial impact on health both in households and across communities.

Thus to meet the need, government has initiated Swatchh Bharat Mission.

The Swachh Bharat Mission, launched in October 2014, consists of two sub-missions – the Swachh Bharat Mission (Gramin) (SBM-G), which will be implemented in rural areas, and the Swachh Bharat Mission (Urban), which will be implemented in urban areas.  SBM-G seeks to eliminate open defecation in rural areas by 2019 through improving access to sanitation.  It also seeks to generate awareness to motivate communities to adopt sustainable sanitation practices, and encourage the use of appropriate technologies for sanitation.

Swatchch Bharat Abhiyan Gramin

Swachh Bharat Mission Gramin SBM (G) endeavours to accelerate rural sanitation coverage, reduce open defecation and improve management of solid and liquid wastes. It focuses on ensuring usage of toilets along with their construction. There is a strong emphasis on behaviour change, including a focus on interpersonal communication; strengthening implementation and delivery mechanisms down to the village level; and giving states flexibility to design delivery mechanisms that take into account local cultures, practices, sensibilities and demands.

The focus of the Strategy is to move towards a ‘Swachh Bharat’ by providing flexibility to State Governments, as Sanitation is a state subject, to decide on their implementation policy and mechanisms, taking into account State specific requirements. This is focused to enable States to develop an Implementation Framework that can utilise the provisions under the Mission effectively and maximize the impact of the interventions. The Government of India’s role would be to complement the efforts of the State Governments through the focused programme being given the status of a Mission, recognizing its dire need for the country.

The suggested approach would be to adopt the Community led and Community Saturation approaches focusing heavily on collective behavioral change. Emphasis is to be placed on awareness generation, triggering behaviour change and demand generation for sanitary facilities in Houses, Schools, Anganwadis, places of Community congregation, and for Solid and Liquid Waste Management activities. Focus will be on Inter Personal Communication (IPC), especially of triggering of demand and use of toilets through social and behavioural change communication and house to house interventions.

Swatchch Bharat Abhiyan Urban

SBM (Urban) aims to ensure that a) No households engage in the practice of open defecation: b) No new insanitary toilets are constructed during the mission period, and c) Pit latrines are converted to sanitary latrines. The Target Group for construction of household units of Toilets, thus, is: (i) 80% of urban households engaging in open defecation (ii) All households with insanitary latrines (iii) All households with single-pit latrines These will be targeted under this component for the construction of household toilets or individual household latrines during the mission period. The remaining 20% of households practicing open defecation are assumed to be catered by community toilets due to constraints of space.

Funding pattern includes:

  • Budgetary allocations
  • Funding and technical support from theWorld Bank, corporations as part of corporate social responsibility (CSR) initiatives, and by state governments under the ‘Sarva Shiksha Abhiyan’ and ‘Rashtriya Madhyamik Shiksha Abhiyan’ 
  • Swachh Bharat Kosh(SBK): Swachh Bharat cess is an improvement in the service tax by 0.5% on all the services in India. 
  • The funding for 9 crore toilets is expected to come from 3 primary sources – Ministry of Drinking Water & Sanitation, Ministry of Rural Development, and the States in the ratio of 75:25 between centre and State and 90:10 for North Eastern state.

Key challenges

  • Mindset of People: About 590 Million persons in rural areas defecate in the open. The Mindset of a major portion of the population habituated to open defecation needs to be changed. Many of them already have a toilet but prefer to defecate in the open.
  • Scientific Solid & Liquid Waste Management sanitation practices: There is no professional expertise in the Municipal Corporation to keep the city clean and it remains unclear how and where the waste will be disposed and what extent of the responsibility for managing waste lies with citizens.
  • Sustainibilty: The lack of any resources for maintenance of school toilets and community sanitary complexes could result in rapid deterioration and subsequent non-usage of these over time, severely impacting the sustainability of the programme.
  • Lack of staff: Inadequate dedicated staff at the Field Level for implementation of rural sanitation.

NSSO Survey on Sanitation

To evaluate the implementation and progress of the Swachh Bharat Mission at central and state level, a survey was conducted by the National Sample Survey Office (NSSO) during May-Jun 2015. Based on findings from the survey, states have been ranked in this report to capture their performance on access and usage of sanitary toilets in India. It is hoped that the ranking will sensitize the states on their performance and instill a sense of positive competition among them.

A survey on swachhta status was conducted by NSSO May-Jun 2015 covering 73, 176 households in 3788 villages across India.

Parameters and weightages of assessment for districts

This reports ranks districts on their status of sanitation, which has been assessed on the following four parameters:

Parameter-                                                                             Weightage

  • Household having access to safe toilets and using them         - 40
  • Households having no litter around                                       -30
  • Public places with no litter on the surrounding                       -20
  • Households having no stagnant wastewater around               -10

Method of state ranking

Based on findings of the survey, a state ranking was derived on the basis of percentage of households having sanitary toilets and using them. This percentage has been derived by multiplying

  • The percentage of households having sanitary toilets, and
  • The percentage of people using household/community toilets (of the people having access to toilets)

Method of district ranking

Districts including 22 from North East and special category states, across the country were shortlisted on the basis of their performance on following two indicators (as per the data available with ministry of drinking water and sanitation)

  • Improvement in toilet coverage since the launch of Swachh Bharat mission (2nd October 2014)
  • Percentage of ODF villages in these districts.

Equal weightages were assigned to these indicators. Since 50% weight was assigned to “improvement in toilet coverage since the launch of Swachh Bharat Mission”, some of the districts already having very high toilet coverage did not feature in the list of 75 districts thus shortlisted.

State ranking based on NSSO 2015 survey

1.      Sikkim

2.      Kerala

3.      Mizoram

4.      Himachal Pradesh

5.      Nagaland

District ranking based on NSSO 2015 survey

·     The survey covered 53 districts located in the plains and 22 in hill states and the North-East.

·     Sindhudurg in Maharashtra emerged as the cleanest district in the country.

·     Among the other cleanest districts in the plains were Nadia (West Bengal), Satatra (Maharashtra), Midnapore East (West Bengal) and Kolhapur (Maharashtra).

·     Dungarpur, Pali and Ajmer in Rajasthan were found to be the laggards - all three ranked in the bottom five.  As many as 13 out of the 53 districts chosen were from Gujarat. But three districts in PM’s home state — Ahmedabad, Anand and Panchmahal -lagged on all four parameters.



Since Open Defecation Free villages and cities cannot be achieved without all the households and individuals conforming to the desired behaviour of toilet use, every day and every time, community action and generation of peer pressure on the outliers are the key. Therefore behavior change communication should focus on triggering entire communities. Community based monitoring and vigilance committees are essential to create peer pressure. Delivery mechanisms would be adopted to meet the community needs, which is to be decided by the States.

Availability of water is an important factor for sustaining sanitation facilities created. Conjoint programmes may be proritised at the District and GP levels under the SBM (Gramin) and the National Rural Drinking Water Programme (NRDWP), to maximize the availability of water for sanitary purposes.

‘Swachh Bharat Abhiyaan’ is not just about cleaning surroundings but also seeking the participation of people in creating trash-free environment, providing sanitation facilities and paving a way for Swatchh Bharat eventually. This campaign will not only help citizens adopt good habits of cleanliness but also boost our image as a nation, sincerely working towards cleanliness.




According to Census 2011, Cities accommodate nearly 31% of India's current population and contribute 63% of GDP. Urban areas are expected to house 40% of India's population and contribute 75% of India's GDP by 2030. This requires comprehensive development of physical, institutional, social and economic infrastructure. All are important in improving the quality of life and attracting people and investment.

Cities are truly the engines of growth today that needs a holistic approach. To meet the overarching aspirations of growing urban population and sustain a virtuous cycle of growth and development, development of Smart Cities has become crucial. However, the Smart Cities Mission calls for appropriate local spatial development plans.

About Smart City Mission

The Smart Cities Mission is an innovative and new flagship initiative by the Government of India to drive economic growth and improve the quality of life of people by enabling local development and harnessing technology as a means to create smart outcomes for citizens.

The Mission will cover 100 cities and its duration will be five years from 2015 to 2020. The Mission is implemented by the Ministry of Urban Development (MoUD). SCM will be operated as a Centrally Sponsored Scheme (CSS) where in the central Government proposes to provide financial support up to Rs. 100 crore per city per year. An equal amount, on a matching basis, will have to be contributed by the State/ULB.


The idea is to look at compact areas, create a replicable model which will act like a light house to other aspiring cities. The Smart Cities Mission is meant to set examples that can be replicated both within and outside the Smart City, catalyzing the creation of similar Smart Cities in various regions and parts of the country.

The strategic components of area-based development in the Smart Cities Mission are city improvement (retrofitting), city renewal (redevelopment) and city extension (greenfield development) plus a Pan-city initiative in which Smart Solutions are applied covering larger parts of the city

Area-based development will transform existing areas (retrofit and redevelop), including slums, into better planned ones, thereby improving livability of the whole City. New areas (Greenfield) will be developed around cities in order to accommodate the expanding population in urban areas.

Application of Smart Solutions will enable cities to use technology, information and data to improve infrastructure and services. Comprehensive development in this way will improve quality of life, create employment and enhance incomes for all, especially the poor and the disadvantaged, leading to inclusive Cities. 

The smart city aspirants have been selected through a process of competition called ‘City Challenge Competition’ in an objective manner as hailed by NITI Aayog. It entails effective citizen participation ending the ‘top down’ approach and leading to ‘people centric’ urban development.

Smart Cities holds strong complementarity with the AMRUT scheme in achieving urban transformation. While AMRUT follows a project-based approach, the Smart Cities Mission follows an area-based strategy. Recent reports suggest that out of the 97 smart cities declared, 89 have initiated this process of which 70 have completed it and 26 of them have already been given credit rating.

Eight cities such as Ahmedabad, Bhopal, Indore, Jaipur, Kakinada, Pune, Rajkot and Visakhapatnam have already appointed Transactional Advisors for issuing municipal bonds. Total of 44 cities including 25 AMRUT cities have so far got credit ratings.

The flipside

Cities in India are governed by multiple organizations and authorities which have their own jurisdictions; thus Indian cities are characterized by multiple boundaries. The governing authorities in a city include urban local bodies (ULB) with the primary functions of service delivery, planning for socio-economic development and regulation of development. This results in their subdivision into different wards. Large cities also have development authorities, urban development authorities or improvement trusts responsible for planning and development that divide cities into various planning zones. Line departments, that are sector-specific organisations, deal with the provision of services in their respective sectors — the water supply agency has its own supply zones. Sewage disposal is also done based on various zones. The organizations responsible for safety and security delineate another set of zones. Therefore, the different spatial entities of the city formed by non-coterminous boundaries deter effective planning and good governance.

This calls for local spatial planning. Spatial planning includes regional planning, transportation and environment as well as promoting economic growth of a region via models and techniques. This term is mostly used in context of Regional Planning.

For example: Conventional city planning talks about where a metro rail project should come up, a spatial plan “will also say what growth impetus the metro project will provide for the city and how the metro plan will be linked to land use and boost the economic activity of the city”.

It will be a blueprint for the city in terms of social infrastructure too. Planning for healthcare and schools, among other things, will be a part of it and once a project is sanctioned, it will become embedded in it. It will be easy to bring about any development project.

Case study of Singapore

Singapore, with its planning boundaries and smart urban development, is a good example. The urban planning boundaries of Singapore were first delineated by the Urban Redevelopment Authority (URA) in the 1991 Concept Plan. It comprised 55 planning areas organized into five planning regions, namely, the central, west, north, north-east and east regions.

The 2014 master plan retains the five planning regions and 55 areas which are further divided into smaller subzones. The fact to be noted is that since the implementation of these boundaries, other departments have also adopted them for their administrative purposes.

The Statistics Department of Singapore published the 2000 census based on these planning area boundaries — earlier, electoral boundaries were used.

Subsequently, further studies were based on these boundaries as seen in the 2010 census and 2015 household survey.

Similarly, the Singapore Police Force constituted the jurisdiction of its neighborhood police centres based on these planning regions, which replaced the then existing seven land divisions.

As for the administrative and electoral divisions, in 2001, the earlier nine districts were replaced with five districts corresponding to the urban planning regions of the URA.

Each district was then further divided into town councils and electoral constituencies, which continues as of now, evident from the divisions of the 2015 election.

The unified boundaries of the various forces in planning and coordinated efforts have contributed to the planned and smart urban development of Singapore.

The above example clearly states the importance of coordination among different urban departments for better implementation of funds, functions and functionaries.

Way forward

An important first step would be to build safeguards to protect the democratic nature of governance structures. A robust governance structure, which allows for sharing of power and financial resources between urban local bodies and the private sector stakeholders, would go a long way towards reducing fears.

The VCF policy framework (a principle that states that people benefiting from public investments in infrastructure should pay for it like land value tax, fee for changing land use, betterment levy, development charges, transfer of development rights, and land pooling systems) was introduced by the Ministry of Urban Development recently. Besides this, tapping of municipal bonds can meet the financial shortages.

Cues can be taken from successful models like Pune Municipal Body (Municipal bonds), Karnataka (for its methods to fund its mass transit projects) and the Mumbai Metropolitan Region Development Authority (betterment levy) to finance infrastructure projects.

Best international practices and principles of the recently concluded UN URBAN AGENDA of the Habitat conference can be incorporated to meet SDG goals.

Similarly, at the planning stage itself, cities must seek convergence in the SCM with AMRUT, Swachh Bharat Mission (SBM), National Heritage City Development and Augmentation Yojana (HRIDAY), Digital India, Skill development, Housing for All, PMAY-Urban for better integration, coordination and inclusiveness.

Institutional and legal mechanisms for any repercussions with regard to social justice, equity and cyber safety also must be stitched on to the mission strategy for it to be truly smart. 

What are centrally Sponsored Schemes (CSS)?

Normally as per the constitutional dispensation, all activities in Government are categorized as those falling in: Central List, State List and Concurrent List. While there is no ambiguity with regard to the Central List, activities which fall under the State and Concurrent List are often subject to over-lapping jurisdiction between the Government of India and the State Governments. For example while the State Governments have the primary responsibility to provide better quality of education to the people, it is the overall responsibility of the Government of India to achieve certain monitorable national goals in terms of levels of education. Thus to fulfill these national goals the concept of Centrally Sponsored Schemes came up in successive five year plans.

Centrally Sponsored Schemes (CSSs) are extended by the Union Government to States under Article 282 of the Constitution. The Centrally-Sponsored Schemes are normally identifiable responsibilities of the Central Government while the responsibility for implementation of these programmes is normally vested with the State Governments. These schemes are formulated with monitorable targets at the central level with adequate provision of funds in the Union Budget under various Ministries. The objectives, strategy and methodology of implementation are prescribed and funds are released to the States based on their requirements. CSSs aim to promote equitable and sustainable human development.

The CSSs are implemented to achieve social objectives like poverty reduction,improving health services, raising food production, etc.

What is the process of flow of funds from Union to State?

The Centrally Sponsored Schemes (CSS) do not fall within the subjects allocated to the Union Government in List I of the Seventh Schedule of the Constitution. However, they are funded by the Union Government to achieve certain national objectives. The CSS have formed an important part of successive Five Year Plans. The flow of funds from the Union Government to the ultimate implementing agencies for any scheme is through one of these two channels:

  1. Funds are transferred to the Consolidated Fund of the State Governments which spend the money through the implementing agencies. In such cases, the agency banks at the field level, honour the payment claims made by authorized officers of the State Government and, in return, place the claim on the State Government through the RBI office at the State Headquarters.
  2. The Union Government transfers funds directly to implementing agencies in the States through normal banking channels. These agencies distribute funds progressively to lower level field formations through banking channels. The banks honour cheques up to the amount lying as credit in their respective bank accounts.

Actual expenditure under the CSS is incurred only when payment is made either to a beneficiary of the scheme or to the supplier of goods and services. However, due to the lack of a proper information system, the tracking of fund flow and correlation between the amount released and expenditure made could not be determined without a degree of uncertainty. Further, when funds are transferred directly to the implementing agencies in the States, it has to be done in advance which results in a substantial accumulation of funds in the pipeline.

The basic issues here are:

  1. whether the simple release of funds by Union Government Ministries/ Departments to State Governments/other implementing agencies, NGOs, societies etc in the States for implementing various centrally sponsored schemes could be termed as expenditure in their accounts,
  2. whether real time information about the use of funds so transferred is available,
  • whether such use of funds gets adequately reflected in government accounts, and
  1. how to minimize the costs of raising the financial resources which are lying unutilized.

Thus, it was pointed out that in case of expenditure incurred on Centrally Sponsored Schemes through the State Budget, the Accountants General (Accounts & Entitlements) in the States would not be able to link such expenditure unless the expenditure incurred on a scheme can be ascertained across all functional Major Heads of Accounts involved. Further, even the accounts compiled by Accountants General (A&E) would not capture the data distinctly under each Centrally Sponsored Schemes in the absence of uniform plan-budget link and a distinct sub-head for the each of the Centrally Sponsored Schemes. Moreover, the expenditure booked in the State Accounts consists of expenditure for the end-use as well as advances to implementing agencies without any distinction between them. There is no coding or accounting rules prescribing coding of the expenditure by their type (enduse, advance etc.)

Further, in many cases, transfers are recorded in registers and not made through account books. This further aggravates the position and the link to end use gets lost in transition. In case of transfers to societies, NGOs etc., their accounts do not get reflected in the governmental accounts. The problem of absence of coding by the type of expenditure exists here also, in the same manner as with the State Government.

It was, therefore, suggested that the following aspects, inter alia, would need to be taken care of:

  1. As in the case of funds from the State Budget, a provision / system should be mandatory for autonomous bodies and NGOs to capture their expenditure that can be identified to the particular Centrally Sponsored Schemes and the type of expenditure.
  2. A system may be put in place to track the amount in transit to the end-use through accounts / subsidiary accounts rather than through registers.

What are flexi-funds under CSS?

The introduction of a flexi-fund component within the Centrally Sponsored Schemes(CSS) has been made to achieve the following objectives:-

  • To provide flexibility to States to meet local needs and requirements within theoverall objective of each programme or scheme;
  • To pilot innovations and improved efficiency within the overall objective of thescheme and its expected outcomes;
  • To undertake mitigation/restoration activities in case of natural calamities in thesector covered by the CSS.

The flexi-fund would continue to be part of the parent Centrally Sponsored Scheme. It may be operated at the level of the Scheme, Sub-scheme and its Components, but not at the level of the Umbrella Program, for example, flexi-funds can be spent on any sub-scheme or component, including creation of a new innovative component, under the primary education scheme, but cannot be used to move primary education funds to the higher education or to any other sector. However, it would be permissible to use flexi-funds to converge different schemes under an umbrella program to improve efficiency and effectiveness of outcomes, for example, nutrition mission can be used to converge anganwadi services with maternity benefits, and health care networks can be used to provide a continuum of health care services across the primary, secondary and tertiary levels.

It may also be noted that the purpose of flexi-funds is to enable the States to satisfy local needs and undertake innovations in areas covered by the Centrally Sponsored Schemes. Flexi-funds should not be used to substitute State's own schemes and project expenditures. It should also not be used for construction/repair of offices/residences for government officials, general publicity,  purchase of vehicles/furniture for offices, distribution of consumer durables/non-durables, incentives/rewards for staff and other unproductive expenditures.

What are the salient provisions of the new Guidelines?

Under the new norms, flexi-funds in each CSS have been increased from the current 10 per cent to 25 per cent for states and 30 per cent for Union Territories.

The States, who want to avail of the flexi-fund facility, should constitute a State Level Sanctioning Committee (SLSC) on the lines of RKVY to sanction projects or activities under the flexi-fund component. However, participation of the concerned Central Ministry would be mandatory in the SLSC before the flexi-fund facility is invoked under any Centrally Sponsored Scheme.

States can use the fund to undertake mitigation or restoration activities in case of natural calamities, or to satisfy local requirements in areas affected by internal security disturbances.

States may, if they so desire, set aside 25 per cent of any CSS as flexi-fund to be spent on any sub-scheme or component or innovation that is in line with the overall aim and objective of the approved Scheme.

The flexi-fund facility is not for CSS which emanate from legislation, like MGNREGA.

Niti Aayog Recommendations on Monitoring & Evaluation

Web-based reporting for the use of flexi-funds may be designed by adding modules to the existing MIS. Outcomes (medium term) and outputs (short term) should be part of the MIS along with pictures/images and good practices to ensure greater transparency and learning across States.

Evaluation of flexi-funds may be done through the existing evaluation mechanism, including those set by the Ministries, NITI Aayog, or by independent third parties. Terms and conditions for evaluation may be designed in such a manner that outcomes of the Scheme as a whole, as well as the flexi-funds are well identified and measurable.

Flexi-funds within each CSS will be subject to the same audit requirements as the parent Centrally Sponsored Scheme, including audit by the Comptroller & Auditor General.


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