NEW DELHI: Finance Commission chairman N K Singh on Friday called for revisiting the Seventh Schedule of Constitution, including those related to health, education, electricity and infrastructure, in view of the change in national priorities as well as technology and global interdependence.
The Seventh Schedule deals with division of power between the Centre and states through three lists — the Union, state and concurrent. And in recent years, schemes such as National Health Mission and Right to Education have meant that the Centre’s allocation has risen. “...we need to revisit Schedule VII of the Constitution in a more fundamental way,” Singh said at the Ficci AGM, where he also called for a review of Centrally Sponsored Schemes (CSS).
Contrary to government’s claims of only a few CSS continuing, a study by the Finance Commission had revealed that there were 211 schemes or sub-schemes, with many masked under the so-called umbrella core schemes. Both the Centre and states can make laws for subjects in the concurrent list, but the Union’s law will prevail in case of conflict.
“Considering that the states often protest that these schemes are ill designed and not suited to their specific needs and entail significant financial outlays by them, no state has really decided to abandon them. Thus, CSS should be flexible enough to allow states to adapt and innovate. We also need a far more credible policy for rationalisation of CSS and Central outlays than have been possible so far,” Singh said.
The annual public outlay on these CSS is close to Rs 6-7 lakh crore, with the Centre alone spending over Rs 3.5 lakh crore or 1.2% of GDP. The Finance Commission chairman further said there was a need for continuity on aligning the fiscal consolidation road map of the Centre and states in more harmonious symmetry. “This is an arduous but inescapable task. A differentiated debt path of states, which recognises present constraints and issues of legacy debt, must be handled with sagacity and sensitivity. This is more required in times of adversities like the world is facing now due to the pandemic.”