9. Centrally Sponsored Schemes: Revamped Fund Flow and \'Mother Sanctions\'

The Union Finance Ministry, through the Department of Expenditure (DoE), has introduced a landmark reform in the fiscal transfer mechanism for Centrally Sponsored Schemes (CSS). By shifting from rigid, individual approvals to a flexible \'Mother Sanction\' system, the Centre aims to eliminate administrative bottlenecks and ensure the \'just-in-time\' release of funds. This move, effective from 1 April 2026, leverages the enhanced SNA SPARSH module of the Public Financial Management System (PFMS) to manage an annual outlay of approximately ₹5 trillion, spanning 28 major schemes including Jal Jeevan Mission and PM Awas Yojana. Core Summary of the New Fund Flow Mechanism • Introduction of Mother Sanctions: Ministries can now issue consolidated approvals, known as \'Mother Sanctions,\' for multiple state-linked schemes (SLS) or heads in a single go, replacing the previous requirement for separate, rigid approvals for every component. • Just-in-Time Disbursal: The primary objective is to move away from the practice of \'parking funds\' in advance. Instead, funds will be released closer to the point of actual requirement through the SNA SPARSH (Samyochit Pranali Ekikrit Shighra Hastantaran) module. • Enhanced Flexibility for States: The revised Standard Operating Procedure (SOP) allows ministries to combine various state-specific components under one umbrella sanction, defining a clear drawing limit for states to access central resources more efficiently. • Digital Integration via PFMS: The Controller General of Accounts (CGA) will oversee this transition through the PFMS platform, which tracks real-time utilization and ensures that the transition to a consolidated system does not lead to a loss of transparency. • Budgetary Alignment: The new framework mandates a tighter alignment between the Union Budget allocations and the actual fund release, ensuring that the ₹5 trillion annual grant is utilized with higher fiscal discipline. Key Definitions • Centrally Sponsored Schemes (CSS): Schemes implemented by State Governments but largely funded by the Central Government with a defined funding pattern (typically 60:40 or 90:10). • Mother Sanction: A high-level administrative and financial approval issued by a Central Ministry that sets the maximum limit of funds a State can draw for a specific scheme or a group of schemes. • SNA SPARSH: An advanced module under the PFMS designed for the \'Integrated Quick Transfer\' of funds, facilitating a \'just-in-time\' model to reduce idle parked capital in state accounts. Constitutional & Legal Provisions • Article 282: Empowerment of the Union or a State to make grants for any public purpose, even if the purpose is not one with respect to which Parliament or the State Legislature may make laws. This is the constitutional base for CSS. • Article 150: Empowers the President (on the advice of the CAG) to prescribe the form in which the accounts of the Union and States shall be kept. The CGA (under the Finance Ministry) manages the PFMS under this broader framework. • Public Financial Management System (PFMS): A statutory and administrative tool used to ensure that the \'Consolidated Fund of India\' is utilized transparently as per the mandates of the Fiscal Responsibility and Budget Management (FRBM) Act. Additional Important Keypoints • Fiscal Federalism: While the Centre streamlines the process, experts note that the federal structure remains intact as states receive consolidated funds faster, though they must ensure that funds are not diverted between schemes. • Current Scope: There are currently 28 umbrella CSS being implemented. The 90:10 funding ratio remains applicable for North-Eastern and Himalayan States (like Uttarakhand and Himachal Pradesh). • Direct Benefit Transfer (DBT) Synergy: The integration of Mother Sanctions with PFMS ensures that the final \'last-mile\' delivery, often via DBT, is not delayed due to lack of liquidity at the State Nodal Agency (SNA) level. Conclusion The shift to \'Mother Sanctions\' and \'Just-in-Time\' funding represents a move toward \'Minimal Government, Maximum Governance\' in fiscal relations. By reducing the number of administrative layers required for fund release, the Centre is addressing a long-standing grievance of the States regarding delayed central shares. However, the success of this reform depends on the technical robustness of the SNA SPARSH module and the ability of State Nodal Agencies to maintain accurate real-time data on the PFMS. UPSC Relevance • GS Paper II (Polity & Governance): Crucial for \'Issues and Challenges Pertaining to the Federal Structure\' and \'Devolution of Powers and Finances up to Local Levels.\' • GS Paper III (Economy): Directly relates to \'Government Budgeting,\' \'Public Financial Management,\' and \'Inclusive Growth and issues arising from it.\'