Central grant financing of state sector subjects is the principal instrument used by the centre to influence states' policies and expenditure. Such grant financing has proliferated over the years and has taken over the development space in the states' jurisdiction affecting their autonomy and responsibility. The earlier limits on Centrally Sponsored Schemes no longer exist and state Plan assistance has also assumed a non-block character with the proliferation of additional central assistance schemes. The centre has also introduced purely discretionary schemes. Another major change has been witnessed in the form of central schemes bypassing state budgets and directing funds to state agencies and local bodies. This paper categorises and analyses central flows based on the Outcome Budget and Expenditure Budget of the government of India for 2005-06.
