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Flexi-Funds under Centrally Sponsored Schemes will now be 25% of the total allocation


The NDA government has rationalized the existing Centrally Sponsored Schemes into 3 groups with varying features. It has now raised the flexi fund component in CSSs from 10% to 25%.


Centrally Sponsored Schemes (CSSs) are the schemes initiated by the various Ministries/Departments of the Government of India. These schemes are usually implemented by the respective State/UT governments. As per the latest guidelines issued by the Ministry of Finance, State Governments will now have 25% of the total allocation under CSSs as Flexi-Funds to customize the programs to local needs.

Centrally Sponsored Schemes (CSSs)

After the NDA came to power in 2014, the 66 existing CSSs have been rationalized and categorized into 28 Umbrella schemes. These 28 umbrella schemes are categorized into the three following groups

  • Core of the Core Schemes (6)
  • Core Schemes (20)
  • Optional Schemes (2)

The 66 existing CSSs have been rationalized

The various existing CSSs have been included into one of these groups while some of the CSSs are dropped. Only six CSSs are now part of the Core of the Core Schemes including the MGNREGS etc. For the Core of the Core Schemes, the existing funding pattern will continue.


Core & Optional Schemes

There are 20 core schemes and these schemes will have compulsory participation by the states. The funding pattern for the 20 core schemes will be the following

Funding Pattern for Core CSSs
StatesCentral ShareState Share
8 North Eastern States90%10%
Uttarakhand, Himachal Pradesh, Jammu & Kashmir90%10%
Rest of the States60%40%

There are only two optional schemes and the participation by states in these schemes is optional. These two schemes are the Border Area Development Program (BADP) and Shyama Prasad Mukherjee Rurban Mission.

Funding Pattern for Optional CSSs
StatesCentral ShareState Share
8 North Eastern States80%20%
Uttarakhand, Himachal Pradesh, Jammu & Kashmir80%20%
Rest of the States50%50%


Release of Funds

The release of funds to the states would be based on the furnished Utilization Certificate of the penultimate installment. There will also be quarterly release of funds and expenditure would be tracked Public Financial Management System (PFMS). The PFMS will be integrated with the State Treasuries in 2016-17.

Flexi –Funds now at 25%

The concept of flexi funds was first introduced in January 2014 during the UPA government. It was stipulated back then that the Central Ministries should provide 10% of their budget under CSSs as a Flexi-Fund, except for those schemes which emanate from legislation like the MGNREGS.  Based on the recommendations of the Sub-Group of Chief Ministers, the NITI Aayog has raised the amount of flexi funds from the current 10% to 25% for States and 30% for UTs. This would be applicable to all CSSs except to those that emanate from legislation like MGNREGA or schemes where a whole or substantial portion of the allocation is flexible.

The flexi funds were introduced with the following objectives

  • To provide flexibility to states to meet local needs and requirements within the overall objective of any given scheme at the sub-head level
  • To pilot innovation to improve efficiency within the overall objective of any given scheme at the sub-head level
  • To undertake mitigation /restoration activities in case of natural calamities or to satisfy local requirements in areas affected by internal security disturbances

The states that wish to avail of the flexi fund facility should constitute a State Level Sanctioning Committee (SLSC) to sanction projects or activities under the flexi fund component.

The guidelines by the government have made it clear that the Name, Logo & the Acronym of any CSS must be retained even for flexi fund component as well. If the states change any of these, the guidelines state that the central contribution will cease.

The flexi fund will still be a part of CSS and can be operated at the level of scheme, sub-scheme and its components. It cannot be operated at the Umbrella scheme level like for eg., Primary Education as a whole. It is also made clear that the flexi funds should not be used to substitute State’s own programs or any project related expenditure. It should also not be used for construction/repair of offices/residences of government officials, general publicity, purchase of vehicle/furniture for offices etc.

The guidelines also talk about web-based reporting of the use of flexi funds along with pictures and sharing of good practices for greater transparency & learning.


About Author

Rakesh has been working on issues related to Right to Information (RTI) for a decade. He is a Data/Information enthusiast & passionate about Governance/Policy issues.

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