Bhubaneswar: Odisha Government has requested Government of India for discontinuance of mandatory transfer of Central and State Share of Centrally Sponsored Schemes (CSS) to the bank account of the implementing agency.
While there is hardly any flexibility to allow operation of funds of Centrally Sponsored Schemes directly through state treasury system, it is resulting in parking of huge funds outside the government account.
More than Rs.10,000 crores is parked in bank accounts, while the State Government is compelled to borrow funds from open market towards the State Share and park it in the bank account of the implementing agency.
As per the CSS guidelines, it is mandatory for the State Governments to transfer the Central Share along with State Share to the bank account of the implementing agency within 15 days of credit of the Central share in the State government account. This is resulting in parking of huge funds outside the State government account, besides it is forcing the State government to borrow from the open market.
Accordingly, the State government has requested the Union Ministry of Finance to consider allowing flexibility to the State Government for operation of CSS directly through the treasury system instead of opening separate scheme based bank accounts.
Similarly, there is a system of off- budget Central transfers for Centrally Sponsored Schemes.
As off-budget transfers are not routed through the Consolidated Fund of the State, the State Budget is termed as distortion in the Fiscal Transfer Mechanism.
This also results in parking of funds in the bank accounts of the implementing agencies.
Although off-budget transfers of Central assistance directly to the implementing agencies have been reduced, funds are still bypassing State treasuries in case of some Central Sector Schemes.
In fact, off-budget transfers have increased substantially over the last two years, resulting in more funds being parked in bank accounts of the implementing agencies.
Against this backdrop, the Odisha Government has also requested the Union government to stop the practice of off-budget transfers directly to the bank accounts of the implementing agencies in respect of all schemes.
The State Government has requested the Union Ministry of Finance to release Central Assistance through Consolidated Fund of the State from 2021-22 Financial Year, officials in knowledge of the development said.
Another issue has been raised by the State Government about allowing the 90:10 sharing pattern in the Centre’s contribution to State Disaster Response Fund (SDRF).
While Odisha is facing disasters highest among the other States, 15th Finance Commission (FFC) found out that as per Disaster Risk Index (DRI), the score of Odisha is 90 out of 100. This score is highest among the other States, so far as DRI is concerned.
However, FFC has recommended sharing patterns in SDRMF at the ratio of 75:25 between Centre and States.
But taking into consideration the DRI score, Odisha needs a special dispensation by allowing sharing pattern of 90:10 in SDRMF at par North Eastern and Himalayan States, requested the State Government, said sources.
