India's public welfare delivery system is experiencing significant strain due to evolving centre-state dynamics, with Centrally Sponsored Schemes creating implementation challenges that affect program effectiveness across the country.

Financial Scale of Centre-State Transfers

A recent analysis reveals the magnitude of financial flows between centre and states, demonstrating the scale of this challenge. In FY26, total transfers are expected to exceed ₹25.00 trillion, distributed across different categories:

Centrally Sponsored Schemes include flagship programs such as PM Awas Yojana, Samagra Shiksha, National Health Mission, and MGNREGA. These programs typically follow a 60:40 funding ratio between centre and states, though variations exist for Northeastern and Himalayan states.

Implementation Conflicts and Rigid Structures

The highly centralised nature of CSS has generated friction between different levels of government. A notable example involves Kerala's rejection of the PM SHRI (Pradhan Mantri Schools for Rising India) scheme, which the state believed was redundant given its existing educational standards. The centre responded by pausing over ₹1,000.00 crore of Samagra Shiksha Abhiyan funds, leading to legal proceedings.

Structural flaws within schemes compound these challenges. The Pradhan Mantri Awas Yojana continues using beneficiary data from the 2011 census, preventing states from adding families who have fallen into poverty or removing those who have improved their economic status over the past decade.

Unspent Funds and Coordination Issues

Despite the scale of funding, utilisation remains problematic. The analysis highlights that approximately ₹1.60 trillion of CSS funds were lying unspent due to rigid implementation rules. This situation creates a paradox where substantial resources remain idle while pressing local requirements go unaddressed.

States cannot repurpose these unused funds for other developmental needs, exacerbating the friction between centre and states in public welfare program implementation.

Declining State Autonomy in Spending

The composition of transfers reveals a concerning trend for state autonomy. While devolution represents the only untied portion of transfers, allowing states complete discretion over spending decisions, its relative share has declined over time. Despite the 14th Finance Commission increasing states' share of divisible taxes from 32% to 42%, states continue receiving only 30-35% of total central tax collections.

Implications for Fiscal Federalism

Both the 14th and 15th Finance Commissions have warned that excessive reliance on conditional transfers risks undermining fiscal federalism foundations. States, being closest to citizens' needs, have historically demonstrated innovation in social programs, with successful initiatives like MGNREGA and Midday Meal Scheme originating at state level before national adoption.

The current system's rigidity prevents states from tailoring programs to local realities, potentially reducing overall welfare outcomes. In a diverse country like India, empowering states with greater implementation flexibility could enhance both administrative efficiency and program effectiveness, moving beyond the current approach of multiplying schemes without addressing fundamental structural constraints.

The Indian Government has unveiled a landmark ₹1.3 trillion investment plan focused on railway safety improvements, representing the largest financial commitment to rail safety infrastructure in the country's history. This substantial allocation underscores the government's commitment to enhancing the safety standards across the national railway network.

Investment Scale and Timeline

The massive investment program is structured to significantly impact railway capital expenditure patterns over the coming years. According to the announcement, safety improvements are expected to constitute approximately 50% of the total railway capital expenditure by FY27.

Industry Impact

This substantial government spending is expected to create significant opportunities for companies operating in the railway engineering and technology sectors. The investment plan will likely benefit various stakeholders involved in railway infrastructure development, safety systems, and related engineering services.

Companies such as HBL Engineering and Kernex Microsystems, which have expertise in railway infrastructure and safety systems, are positioned to potentially benefit from this increased government spending on railway safety improvements.

Strategic Significance

The ₹1.3 trillion allocation represents a strategic shift in railway infrastructure priorities, with safety improvements taking center stage in capital expenditure planning. This investment approach reflects the government's focus on modernizing railway safety standards and infrastructure across the national network.

The scale of this investment indicates the government's recognition of the critical importance of railway safety infrastructure in supporting the country's transportation network and economic development objectives.