Question
Consider the following statements regarding the Centrally Sponsored Schemes (CSCs):
Select the correct answer using the code given below:
- Central government gives grants to States to implement these schemes
- For the central government, most of the expenditure on CSCs is revenue expenditure
- Central government transfers the amount to either State Consolidated Fund or directly to State implementing agencies
Select the correct answer using the code given below:
Answer: Option A
Answer: (a)
The central government gives grants to States to implement Centrally Sponsored Schemes (CSCs). And for Central Government (almost) all the expenditure as revenue expenditure
For example, the budgeted amount for the CSC (the core of the core) MGNREGA for the year 2020-21 is Rs. 61,500 crores and is revenue expenditure for Govt. of India. And since it is a GRANT from Govt. of India side to States, so it must be Revenue exp for Govt. of India.
But States can spend this as revenue or capital expenditure in the creation of assets. If States spend this on capital expenditure, then Centres "Effective Revenue Deficit" will get reduced by that amount.
Effective Revenue Deficit = Revenue Deficit - Grants given to States for capital expenditure
Till 2013-14, Funds for CSS were routed through two channels, the consolidated fund of the States and directly to the State/ District Level Autonomous Bodies/Implementing Agencies. (CSSs are a part of funds transfer to States/UTs).
In 2014-15, direct transfers to State implementing agencies were discontinued and all transfers to States including for the CSS are now routed through the Consolidated Funds of the States.
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Answer: (a)
The central government gives grants to States to implement Centrally Sponsored Schemes (CSCs). And for Central Government (almost) all the expenditure as revenue expenditure
For example, the budgeted amount for the CSC (the core of the core) MGNREGA for the year 2020-21 is Rs. 61,500 crores and is revenue expenditure for Govt. of India. And since it is a GRANT from Govt. of India side to States, so it must be Revenue exp for Govt. of India.
But States can spend this as revenue or capital expenditure in the creation of assets. If States spend this on capital expenditure, then Centres "Effective Revenue Deficit" will get reduced by that amount.
Effective Revenue Deficit = Revenue Deficit - Grants given to States for capital expenditure
Till 2013-14, Funds for CSS were routed through two channels, the consolidated fund of the States and directly to the State/ District Level Autonomous Bodies/Implementing Agencies. (CSSs are a part of funds transfer to States/UTs).
In 2014-15, direct transfers to State implementing agencies were discontinued and all transfers to States including for the CSS are now routed through the Consolidated Funds of the States.
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