When State Schemes Overlap With Central Schemes: How It’s Managed

India’s federal welfare system regularly produces genuine overlap: both the Centre and individual states run their own welfare schemes covering similar ground, from health insurance to farmer income support. This article looks at how that overlap actually plays out, using two of the most prominent examples.

Why Overlap Happens in the First Place

Because welfare subjects like health and agriculture sit on the Concurrent or State Lists rather than being exclusively central, both the Centre and individual state governments retain the constitutional authority to design and run their own welfare schemes covering the same broad policy area, meaning a state can choose to adopt a central scheme as designed, decline to adopt it and run its own parallel programme instead, or in some cases do both simultaneously, layering a state-specific top-up on top of the central scheme’s base benefits.

The Ayushman Bharat-PMJAY Non-Implementation Dispute

The most prominent recent example of this overlap becoming a genuine political flashpoint involves Ayushman Bharat’s health insurance component, PMJAY, which several states, most notably Delhi and West Bengal, declined to implement for an extended period, choosing instead to continue running their own separate state health insurance schemes. This non-implementation became a significant point of political contention, with the Supreme Court issuing formal notice to Delhi, Telangana, Odisha, and West Bengal specifically over their non-implementation of the scheme, according to Deccan Herald’s coverage of the Court’s action, while BJP leader J.P. Nadda publicly claimed, according to further Deccan Herald reporting, that political parties governing states that hadn’t implemented the scheme had subsequently been “voted out of power,” directly framing the implementation gap as a political liability for the affected state governments, with Prime Minister Modi separately criticising the Delhi and West Bengal governments directly over the same non-implementation, according to the Tribune’s coverage of his remarks.

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Delhi’s Eventual Reversal

This specific dispute produced a notable resolution when Delhi’s government, following the BJP’s 2025 assembly election victory covered in our earlier article on the Delhi-Centre Lieutenant Governor dispute, signed a formal agreement with the Centre to roll out Ayushman Bharat in the capital, according to Deccan Herald’s coverage describing the move as fulfilling a specific election promise, illustrating how a change in a state’s ruling party can directly resolve this kind of scheme-adoption standoff even when the underlying policy disagreement had persisted for years under the previous state government.

PM-KISAN and State-Level Farmer Support Schemes

A structurally different kind of overlap exists around farmer income support, where the central PM-KISAN scheme, providing a flat Rs 6,000 annual transfer per eligible farmer since its 2019 launch, runs alongside separate state-level schemes including Telangana’s Rythu Bandhu, later renamed Rythu Bharosa, and Andhra Pradesh’s own version of the same broader approach, according to comparative analysis by GKToday. Unlike the Ayushman Bharat dispute, where states generally chose either the central scheme or their own alternative, these farmer support schemes typically run genuinely in parallel, since PM-KISAN’s flat per-farmer transfer and the state schemes’ per-acre input support structure operate on different eligibility logic, allowing many farmers to receive benefits from both simultaneously rather than states needing to choose one over the other.

Also read: Southern States and Delimitation: Why They Fear Losing Seats

The Criticism Each Approach Has Drawn

Both overlapping schemes have drawn their own specific structural criticism independent of the Centre-state adoption dispute itself. The Federal’s analysis of Telangana’s Rythu Bandhu specifically noted the scheme’s per-acre design tends to benefit landowners considerably more than tenant farmers who work land they don’t own, a structural equity concern distinct from the scheme’s funding source. Newslaundry’s separate analysis of PM-KISAN documented the central scheme’s own exclusion errors, cases of eligible farmers failing to receive payments due to administrative or documentation issues, alongside broader questions about whether the scheme’s flat transfer amount has kept pace with its original income-support goals given rising costs.

Why No Formal Harmonisation Mechanism Exists

Notably, unlike the more structured, negotiated coordination processes covered elsewhere in this category, such as the GST Council‘s formal voting mechanism, no comparable formal harmonisation body exists specifically to coordinate overlapping central and state welfare schemes, meaning each individual overlap, whether resolved through a state simply declining central scheme adoption, as with Ayushman Bharat in several states, or through genuine parallel operation, as with PM-KISAN and state farmer schemes, gets worked out on a case-by-case basis between the specific Centre and state government involved rather than through any single, consistent institutional process applied uniformly across all overlapping schemes nationwide.

Bottom Line

Overlap between central and state welfare schemes is a structural feature of India’s federal system rather than an occasional anomaly, playing out differently depending on the specific policy area: Ayushman Bharat’s health insurance component became a genuine political standoff, with Delhi, West Bengal, and other states declining implementation for years before Delhi eventually reversed course following its 2025 change of government, while PM-KISAN and state farmer income schemes have generally run in parallel with less direct conflict, even as each individual scheme has drawn its own separate structural criticism over exclusion errors or landowner-tenant equity concerns, with no single formal mechanism existing to harmonise these overlaps consistently across the country.

FAQ

Abhyudaya Verma