House panel questions Centre, States on issues in SC scholarship schemes

1. At a Glance

• The Public Accounts Committee (PAC) of Parliament questioned the Union government and several State governments about gaps, including "fraud markers", that the CAG found in the Pre-Matric and Post-Matric Scholarship schemes for Scheduled Caste (SC) students [1].
• Post-Matric Scholarship for SCs (PMS-SC) is a Centrally Sponsored Scheme. The money is paid by Direct Benefit Transfer (DBT), and Centre and States share the cost 60:40 [S2, S3].
• The story brings together several UPSC themes: parliamentary financial control (PAC + CAG), cooperative federalism (Centre sets the scheme, States implement it), welfare leakages and social justice for SCs.
• CAG has audited SC scholarships several times: a Union-level audit in 2018, a Kerala State audit in 2024, and the 2025 report that the PAC is now examining. Many of the same problems keep coming back [S1, S5, S6].

2. Why in the News

• 15 Oct 2026 (Thursday): the PAC, chaired by K.C. Venugopal (Congress MP), questioned the Union government and States on how they had responded to the CAG findings [1].
• Chief Secretaries of six States were due to appear but did not. The committee is likely to move privilege notices against them [1].
• The Union government said the implementation burden lies with States/UTs. The PAC gave the Ministry of Social Justice and Empowerment (MoSJE) one month to submit a detailed Action-Taken Report (ATR) on every issue the CAG raised [1].
• What the 2025 CAG report found [1]:
• 40.75 lakh beneficiaries in 14 States got their scholarships late, with delays of 1 to 90 months.
• More than 3.5 lakh beneficiaries got no scholarship at all.
• More than 5,700 cases were paid without checking income eligibility.
• More than 6,000 cases of non-SC beneficiaries receiving SC scholarships.
• Double, short and excess payments.

3. Background & Evolution

• PMS-SC helps SC students study after Class X (post-matric). It covers the whole course, including compulsory non-refundable fees fixed by State/UT fee committees, an academic allowance and a disability allowance [2].
• Funding change, FY 2020-21: the old "committed liability" model was replaced by a fixed 60:40 Centre–State share (90:10 for North-Eastern States) [S2, S3].
• Revamp, 2020-21: a PIB release called it a "Complete Revamp of PMS-SC to provide Universal Access to SC Youth for Higher Education". The full amount, both Central and State shares, now goes only by DBT into students' accounts [S3, S2].
• Audit history:
• 2018 – CAG Report No. 12 of 2018: a Union-level performance audit of PMS-SC in 5 States (Karnataka, Maharashtra, Punjab, Tamil Nadu, Uttar Pradesh) for 2012–17. It covered ₹18,647 crore spent on 1.36 crore SC students. Payments to 18.58 lakh students were delayed by 1 to 6 years [S5, S8].
• July 2024 – CAG Report No. 3 of 2024 (Kerala): a performance audit of Pre- and Post-Matric schemes for SC, ST and Minority students for 2017–22 [6].

• 2025 – CAG report (Chapter II, Section A): Pre-Matric and Post-Matric scholarships for SCs. This is the basis of the 2026 PAC hearing [S1, S7].

• Related scheme: the Pre-Matric Scholarship Scheme for SCs & Others covers Classes IX–X [4].

4. Core Static Facts

5. Multi-Dimensional Analysis

Social

• About 3.5 lakh students got nothing and 40.75 lakh got paid late. For first-generation SC learners, this directly hurts their chances of continuing in higher education [1].
• Payments to non-SC beneficiaries (more than 6,000 cases) take money away from the intended group. This is a targeting failure [1].
• The Kerala audit found that 10–12% of SC pre-matric students were left out in 2017–21. In 2019-20, 3,499 students were excluded because 379 schools were not registered on the e-grantz portal [6].

Administrative / Federal

• The Centre says States are responsible for implementation, and States did not turn up before the PAC. This is a blame-shifting problem typical of Centrally Sponsored Schemes [1].
• Kerala did not do a survey of potential beneficiaries. Its estimated and actual beneficiary numbers differed widely, which points to weak planning [6].
• Kerala also lost ₹96.65 lakh in 2017–22 because it did not claim its admissible administrative expenses from the Centre [6].

Economic / Fiscal

• Delayed and missing payments happen even though large sums are released, for example ₹7,210.80 crore in 2025-26 up to November [S2, S1].
• The 60:40 pattern makes the scheme depend on State budgets releasing their share on time [S2, S3].
• Double and excess payments are wasted spending that should be recovered [1].

Governance / Ethical

• The CAG called some patterns "fraud markers". Payments made without checking income (more than 5,700 cases) show weak checks before payment [1].
• DBT is meant to cut leakage, but the audit shows that verifying who is eligible, not just how money is transferred, is still the weak link [S1, S2].
• The same problems appear in the 2018 and 2025 audits, which suggests that earlier action-taken reports were not followed up [S5, S1].

Legal / Constitutional (Parliamentary accountability)

• The CAG report → PAC examination → ATR chain is how Parliament holds the executive financially accountable after money is spent [1].
• Moving privilege notices against State Chief Secretaries tests how far a parliamentary committee's powers reach over State officials [1].

6. Recent Developments (last 12–18 months)

• 2025: the CAG report on Pre/Post-Matric SC scholarships reported delays, non-payment, ineligible and non-SC beneficiaries, and double, short and excess payments [S1, S7].
• 2025 (CAG chapter): in 67 sampled institutions, there were 8,037 delayed pre-matric payments totalling ₹2.29 crore, with delays from 1 month to more than 1 year [7].
• 30 Nov 2025: the MoSJE Year-End Review reported ₹7,210.80 crore released to 61.71 lakh PMS-SC beneficiaries in 2025-26 [2].
• 15 Oct 2026: the PAC hearing. Six Chief Secretaries were absent, privilege notices are likely, and MoSJE was given a 1-month ATR deadline [1].

7. Prelims Hooks

• PMS-SC is a Centrally Sponsored Scheme under the Ministry of Social Justice & Empowerment, not the Ministry of Education [2].
• Centre:State funding is 60:40, and 90:10 for North-Eastern States [2].
• The fixed-share pattern replaced "committed liability" in FY 2020-21 [S2, S3].
• The PMS-SC income ceiling is ₹2.5 lakh per year of parental/guardian income [2].
• The whole scholarship, both Central and State shares, is paid by DBT [2].
• In 2025-26 (to 30 Nov 2025), ₹7,210.80 crore was released to 61.71 lakh SC beneficiaries [2].
• The 2025 CAG report found 40.75 lakh delayed beneficiaries across 14 States, with delays of up to 90 months [1].
• It found more than 6,000 non-SC beneficiaries receiving SC scholarships [1].
• CAG Report No. 12 of 2018 audited PMS-SC in 5 States for 2012–17, covering ₹18,647 crore and 1.36 crore students [5].
• The 2018 audit found payments to 18.58 lakh SC students delayed by 1–6 years in Maharashtra, Punjab, Tamil Nadu and Uttar Pradesh [5].
• Kerala's CAG Report No. 3 of 2024 covered SC, ST and Minority scholarships for 2017–22 [6].
• The PAC (2026) is chaired by K.C. Venugopal, an opposition (Congress) MP [1].

8. Why DBT Did Not Stop the Wrong People Getting Paid

• DBT protects the last step, not the first
• DBT (Direct Benefit Transfer: money sent straight to the student's bank account) makes sure money reaches the account that is on the list [2].
• It cannot check whether that person should be on the list at all.
• Under the 2020 revamp, checking a student's eligibility, caste status, Aadhaar and bank details is the States' job, done on the online portal [9].

• The 2025 audit found more than 5,700 cases paid without an income check and more than 6,000 non-SC beneficiaries. So the failure was in this checking step, not in the transfer [1].

• Fraud can enter through the bank account itself

• In the 2019 scholarship scam in Punjab, Himachal Pradesh, Haryana and Chandigarh, the CBI found that officials, private institutes and bank staff had worked together [10].
• Fake accounts were opened at public sector banks using students' documents, and bank officials did not check who the account holders were [10].

• DBT then paid these accounts "correctly". The money moved through the proper channel and still went to the wrong people.

• Institutions are the weak point, not only students

• Punjab's own audit in 2018 covered 2,183 private and 2,126 government institutions. By then about ₹329 crore had been marked as objectionable [11].
• The 2018 CAG audit found errors in State portal data worth ₹455.98 crore across Punjab, Tamil Nadu and Uttar Pradesh [8].
• When colleges report enrolment and fees themselves, a portal only records what they enter.

9. How the 60:40 Rule Turned One Delay Into Two

• The old model left a huge pile of unpaid bills
• Under "committed liability" (the Centre paid only the cost above a fixed base level), the Ministry kept releasing less than was needed [3].

• By 2018, arrears (unpaid amounts that had piled up) in the five audited States were ₹5,368 crore, which was 71% of what was due [8].

• The new model makes the Centre wait for the State

• Since 2020-21, the Centre sends its 60% only after the State has paid its own 40% [9].
• So if a State's budget is tight, the student gets neither share, not just the State's part.

• This helps explain why the 2025 audit still found 40.75 lakh late payments, some up to 90 months late [1].

• States said from the start that the formula was unfair to them

• In 2019, Punjab's Chief Minister called the proposed fund-sharing inadequate [13].

• States with many SC students in private colleges carry a large fee bill. A fixed 40% weighs more heavily on them.

• The student pays the price for the delay

• After the 2018 guideline change, Punjab reported that private colleges had started asking SC students for advance fees [12].
• A scholarship that comes late forces a poor family to pay fees first, which the scheme was meant to prevent. Many students may simply drop out.

10. Is the Union Right That Implementation Is Only the States' Job?

• The Union's strongest argument
• States run the portals, check eligibility and caste, and must release their 40% first [9].
• Most of the faults the CAG listed (no income check, non-SC beneficiaries, double payments) happen at this State-level checking stage [1].
• The Kerala audit also blamed State-level weaknesses: no survey of likely beneficiaries, and schools not registered on e-grantz [6].

• This part is fair. The Centre cannot check lakhs of caste and income certificates from Delhi.

• Why the argument does not fully hold

• The Centre designs the scheme, sets the rules and pays 60% of the money [2]. A Centrally Sponsored Scheme (a scheme the Centre designs and part-funds, and States run) makes both sides answerable.
• The 2018 audit blamed the Ministry's own short releases for 71% of arrears [8]. Delay is not only a State failure.

• The Ministry also had to answer for the same faults in 2018 and in 2025 [S5, S1]. Saying "States are responsible" does not explain why the Ministry's own follow-up did not stop them coming back.

• A fair reading

• The States failed at checking eligibility. The Centre failed to make its own conditions work, and in the past it failed to pay on time.
• This is why the PAC asked the Ministry for an ATR (Action-Taken Report: a written reply on what was done about each audit point), even though implementation is at the State level [1].

11. Why the PAC Hearing May Not End the Problem

• The audit trail is long and slow
• The 2018 audit covered spending from 2012–17 [5]. The issues the PAC heard in 2026 come from Para 2.13 of CAG Report No. 36 of 2025 [14].

• By the time Parliament looks at a fault, students affected years earlier have often already left their course or dropped out.

• The same faults keep coming back

• Delays of 1–6 years in 2018 and of up to 90 months in 2025 show that past ATRs did not change how the scheme runs on the ground [S5, S1].

• An ATR reports what was done. It does not force anyone to fix the system.

• Privilege notices to State officers raise a federal question

• The PAC listed the governments of Uttar Pradesh, Karnataka and Punjab among the witnesses for this subject [14]. Six Chief Secretaries did not appear [1].
• Chief Secretaries answer to their own State governments and legislatures. States also have their own CAG audit reports, like Kerala's [6].
• Using parliamentary privilege (Parliament's special powers to protect its work) against them may lead to a Union–State conflict over who checks State officers, more than to faster payments.

12. What Should Change, and Who Must Do It

• MoSJE should make its 2020 promise of checks measurable
• The 2020 revamp promised fool-proof checking of eligibility, caste, Aadhaar and bank details [9].

• The Ministry's ATR should report, State by State, how many applications were rejected at each check. That would show whether the checks actually happen.

• States should audit colleges, not just students

• Punjab's 2018 audit of more than 4,300 institutions found ₹329 crore that it marked as objectionable [11].

• The CBI scam case shows that the fraud ran through institutes and bank branches [10]. Regular checks of colleges with sudden jumps in SC enrolment would target the actual source.

• States should pay their 40% on a fixed timetable

• The Centre pays only after the State pays [9], so each State's release date decides when students get their money.

• Publishing these release dates would show clearly which side caused a delay, which the PAC hearing could not settle [1].

• Banks must check who opens a scholarship account

• Fake accounts were opened using students' papers without checking who the account holder was [10].
• Paying only into accounts linked to the student's Aadhaar and verified in person would cut off this route.

13. Anchors for Answers

• Data: 40.75 lakh SC students in 14 States got their scholarships late, by up to 90 months; more than 6,000 non-SC beneficiaries were paid (CAG 2025) [1]
• Data: ₹5,368 crore (71%) in arrears in 5 States because of the Ministry's short releases (CAG 2018) [8]
• Data: ₹455.98 crore in portal-data errors in Punjab, Tamil Nadu and Uttar Pradesh [8]; ₹329 crore marked objectionable by Punjab's own audit [11]
• Report/Committee: CAG Report No. 12 of 2018 [5]; CAG Report No. 3 of 2024 (Kerala) [6]; CAG Report No. 36 of 2025, Para 2.13, examined by the PAC in October 2026 [14]
• Law/Case: CBI probe into the scholarship scam in Punjab, Himachal Pradesh, Haryana and Chandigarh, with fake bank accounts opened using students' documents [10]
• Scheme: The 2020 PMS-SC revamp: 60:40 sharing, Central share released only after the State pays, States to check eligibility on the portal [9]

14. Mains Relevance

• GS-II: welfare schemes for vulnerable sections and how they perform; parliamentary committees; constitutional bodies (CAG); federalism and Centrally Sponsored Schemes.
• GS-II/III: governance, transparency and accountability; DBT and leakages.
• GS-IV: probity in governance; accountability of public servants.
• Possible questions: 1. Despite DBT, CAG audits keep finding exclusion and inclusion errors in SC scholarship schemes. Examine the reasons and suggest reforms. 2. The Public Accounts Committee is the watchdog's watchdog. Discuss its role, limits and effectiveness, with recent examples. 3. Centrally Sponsored Schemes often lead to blurred accountability between the Union and States. Discuss with reference to post-matric scholarships for Scheduled Castes.

15. Related Topics to Study Next

• CAG (Arts. 148–151): the constitutional basis of the audit reports the PAC examines.
• Financial committees of Parliament (PAC, Estimates Committee, COPU): to compare their roles in financial accountability.
• Parliamentary privileges (Art. 105): the legal basis for the threatened privilege notices.
• Centrally Sponsored Schemes rationalisation: the 60:40 funding pattern and disputes over State shares.
• DBT and Aadhaar seeding: the delivery system whose eligibility checks failed.
• National Commission for Scheduled Castes (Art. 338): monitors SC safeguards and grievances.
• PM-YASASVI / scholarships for OBC, EBC and DNT students: similar MoSJE schemes, easy to confuse with PMS-SC.
• National Scholarship Portal and State portals (for example, Kerala's e-grantz): the digital systems through which applications and payments are processed.

16. NCERT Concepts to Revise

• Public Accounts Committee (Polity): The PAC is the committee questioning the Centre and States on the CAG's findings about the scholarship schemes.
• Comptroller and Auditor General (Polity): The CAG's audit reports found the delays, ineligible payments and 'fraud markers' that the PAC is now examining.
• Centrally sponsored schemes (Economy): PMS-SC is shared 60:40 between Centre and States, which explains the blame-shifting over who implements it.
• Direct Benefit Transfer (Polity): Scholarships are paid by DBT, yet audits show wrong-beneficiary and delayed payments, so revise how DBT works.
• Parliamentary privileges (Polity): The PAC may move privilege notices against Chief Secretaries who did not appear, so know what privileges mean.
• Cooperative federalism (Polity): The Centre designs the scheme and States deliver it, so the story is about Union-State partnership and its gaps.

17. Common Errors / Trap Areas

• Wrong ministry: SC scholarships fall under MoSJE. ST scholarships fall under the Ministry of Tribal Affairs, and minority scholarships under Minority Affairs [2].
• Wrong funding ratio: the current ratio is 60:40 (90:10 for NE). The committed-liability model ended in 2020-21 [S2, S3].
• Mixing up audits: the 2018 report was a Union-level audit of 5 States. The 2024 report was State-level (Kerala). The 2025 report is the one the PAC heard in 2026 [S5, S6, S1].
• Pre-Matric vs Post-Matric: Pre-Matric covers Classes IX–X and Post-Matric covers studies after Class X. They are separate schemes [S4, S2].
• Who appears before the PAC: State Chief Secretaries were summoned for implementation gaps. Committee rules and the PAC's statutory basis were not in the retrieved sources, so check them in standard polity texts.