Central Transfers to States in India

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Questions and Answers

What is the primary purpose of the AWP&B submitted by each State and Union Territory?

To report on educational outcomes

To assess infrastructure needs

To secure funding for educational programs (correct)

To evaluate teaching staff

The Central share of funds is released to States and Union Territories in a single instalment.

False

What are the two heads under which the Central share of funds is divided?

General and Capital

The funds received by State Implementing Societies (SIS) are released to government schools, government aided schools, and __________ for giving grants.

private schools Signup and view all the answers

Match the following components with their respective roles:

Ad-hoc instalment = Initial funding release State Implementing Societies (SIS) = Distributing funds to schools Utilisation certificate = Document for fund release Central share = Government funding source Signup and view all the answers

What percentage of total grants under central schemes do the grants for 5 schemes constitute?

66 percent Signup and view all the answers

Centrally Sponsored Schemes were found to have a significant positive impact on service levels due to their large number.

False Signup and view all the answers

What is suggested as a better approach for states that cannot provide adequate services?

Enable them to provide services through general purpose transfers. Signup and view all the answers

The government has adopted _____ schemes under Centrally Sponsored Schemes.

28 Signup and view all the answers

Match the following aspects of government schemes with their characteristics:

Centrally Sponsored Schemes = 28 schemes Central Sector Schemes = 45 schemes Grants for 5 schemes = 66 percent of total grants Service level impact = Thin spread of resources Signup and view all the answers

What is the purpose of the Finance Commission in India?

To make recommendations for general purpose transfers Signup and view all the answers

The grants provided by various Central Ministries are intended to achieve minimum standards of services.

False Signup and view all the answers

What are the two main sources of grants mentioned in the context of intergovernmental transfers in India?

Recommendations of the Finance Commission and grants from various Central Ministries. Signup and view all the answers

In India, the ______________ Finance Commission's recommendations have been implemented since 2015-16.

Fourteenth Signup and view all the answers

What is one significant issue with the design of specific purpose transfers?

They are not linked to service level outcomes. Signup and view all the answers

Match the following sources of funding with their characteristics:

Finance Commission = General purpose transfers with equalization element Central Ministries = Scheme-based grants without equalization Centrally Sponsored Schemes = Specific purpose transfers linked to central initiatives Central Sector Schemes = Grants provided for various sectors but not necessarily for minimum standards Signup and view all the answers

Higher income states receive larger per capita expenditures on social services compared to lower income states.

True Signup and view all the answers

Which states tend not to receive larger grants for education despite their needs?

Educationally backward states. Signup and view all the answers

Study Notes

Purpose of the AWP&B

The Annual Work Plan & Budget (AWP&B) submitted by each State and Union Territory outlines the intended expenditure for various centrally sponsored schemes.

The Central share of funds is released in a single instalment to States and Union Territories.
The funds are divided into two heads:
- Non-Plan Grants are for general state purposes.
- Plan Grants are for specific developmental programs and schemes.
State Implementing Societies (SIS) receive funds and distribute them to government schools, government-aided schools, and private schools for providing grants.

Components and Roles

Matching Grants: The central government contributes a certain percentage of the funds, with the state government providing the remaining portion.
Tied Grants: Funds that are allocated for specific purposes, determined by the central government.
Untied Grants: Funds that can be used for a variety of purposes, as determined by the state government.

Percentage of Grants

Five central schemes account for 75% of total grants under central schemes.

Impact and Approach

Centrally Sponsored Schemes have a significant positive impact on service levels due to their large number.
States that cannot provide adequate services are suggested to adopt a more centralized approach, where the central government plays a larger role in the implementation of schemes.

Government Schemes

The government has adopted 35 schemes under Centrally Sponsored Schemes.
Centrally Sponsored Schemes are jointly funded and implemented by the central and state governments, with the objective of achieving specific national development goals.
State-Specific Schemes are funded and implemented by individual state governments, with the aim of addressing the unique needs and challenges of each state.

Purpose of Finance Commission

The Finance Commission in India is responsible for recommending the distribution of tax revenue between the central government and the states.

Sources of Grants

Vertical Transfers are financial flows from the central government to the state governments.
Horizontal Transfers are financial flows between state governments.

Implementation and Issues

The Fourteenth Finance Commission's recommendations have been implemented since 2015-16.
One significant issue with specific purpose transfers is that they can be subject to political influence and discretionary spending.

Sources of Funding and Characteristics

Central government provides funds for nationally funded programs and schemes.
State government provides funds for state-specific programs and schemes.
Local government provides funds for local development initiatives and services.

State Expenditures

Higher income states receive larger per capita expenditures on social services compared to lower income states.

Grants and Needs

Despite their needs, states with lower per capita income tend not to receive larger grants for education.

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Description

This quiz explores the findings of a study conducted by the National Institute of Public Finance and Policy on central transfers to Indian states. Understand the fiscal imbalances, revenue variations, and the role of intergovernmental transfers in ensuring equitable public service access. Delve into the complexities faced by subnational governments within India's federation.