The Union government has since started fresh efforts to breathe life into the scheme with enhanced funding and a new fund-sharing system. New guidelines were also issued in 2021 to take corrective measures for the scheme.

However, these efforts may miss the mark. The new fund sharing system is limited by various conditions. The new guidelines fail to sufficiently tackle issues such as low unit cost and unrevised income ceilings. These, along with many other issues, limit the effective implementation and outcome of the scheme in the first place.

To revamp the scheme, enhanced central assistance of Rs 35,219 crore was announced in 2021. This was to be provided for five years until 2025-26, indicating an annual outlay of about Rs 7,000 crore. Thus, the allocation of Rs 3,415.62 crore for 2021-22 fell far below expectations.

The outlay has picked up in 2022-23 (according to the Budget Estimate). The total allocation for the Department of Social Justice and Empowerment (DoSJE) witnessed an increase of 13% in 2022-23 (BE). This increase can be largely traced to an increased outlay of Rs 5,660 crore for the PMS-SC scheme (Figure 1) which is much closer to the expected annual outlay of Rs 7,000 crore.

Figure 1: Budgetary Priority for Pre- and Post-Matric Scholarships for SCs (Rs in crore)

However, enhanced central assistance may not be enough as the new guidelines are still riddled with multiple challenges. An increase in central allocation may keep the PMS-SC scheme floating, but it will not ensure that the scheme produces the desired goal of educational equity for the SC community.

For one, the unit costs of different components under the scheme have not been revised in the last decade.

When the revised guidelines in 2021 got to it, it still failed to make a meaningful revision. The current scholarship amount under the maintenance/academic category is not sufficient to meet the actual needs of students. It now ranges from Rs 4,000 to Rs 13,500 for 10 months in an academic year for hostellers and Rs 2,500 to Rs 7,000 for day scholars, as compared to the previous range of Rs 3,800 to Rs 12,000 for hostellers and Rs 2,300 to Rs 5,500 for day scholars for 10 months, under the PMS-SC scheme guidelines of 2010.

The sufficiency or insufficiency of the unit cost of services offered under the PMS-SC scheme not only sheds light on the adequacy or inadequacy of the allocation for the scheme but also has a bearing on the continuation or discontinuation of education by the students.

The new guidelines also faltered on the family income eligibility criterion, forgoing revision for the same. The parental or family income-ceiling required to be eligible for the scheme was last revised in 2013-14 to Rs 2.5 lakh per annum from Rs 2 lakh per annum in 2010, and therefore does not factor in inflation, excluding many students from the gambit of the scheme.

The funding system of committed liability for the scheme followed a complicated process. The amount spent by states for the scheme in the last year of the last Five Year Plan or the total of the demand of the state as well as the Union government in the last year of the previous Finance Commission cycle after 2018 was fixed as its ‘committed liability’.

Demand for funds over and above this was met by the Union government in the form of central assistance, has long been a cause of concern and generated a considerable amount of arrears over the years. This funding system for the scheme was revised in a cabinet meeting on December 23, 2020. The Centre-state or Union Territory ratio was fixed at 60:40. This was to be 90:10 for the northeastern States, applicable with effect from 2020-21.

However, the review of the new guidelines of 2021 shows that the new fixed ratio system is not as simple as compared to other similar schemes and still comes riddled with conditions. The states or Union Territories are instructed to disburse their 40% share and report to the Union government, following which the latter will disburse its 60% share. This means that the release of Union government’s share is conditional on states first doing their bit.

On top of that, the 60:40 ratio will be applied on average demand from the states, with the three years – 2017-18 to 2019-20 – taken as the base period demand, instead of actual demand every year. Over this, Union government’s assistance for all states with regard to base period will increase by 5% each year, regardless of the actual demand for that year.

Additional fund requirement over the 5% increase is to be met by the states. Ideally, as a core-of-the-core Centrally Sponsored Scheme, PMS-SC should have a fund sharing ratio of 75:25 or 90:10 like its counterpart PMS scheme for Scheduled Tribes.

Unless these issues are tackled, the enhanced budget alone would not be able to get the desired outcome of increased GER from the scheme.