In a major policy push to rationalise government expenditure and eliminate overlapping initiatives, the Finance Ministry has called for a stricter and outcome-driven approach to reappraise all Central Sector Schemes (CSs) and Centrally-Sponsored Schemes (CSSs) that are set to end by March 31, 2026.
Documents reviewed indicate that during a high-level workshop chaired by the Cabinet Secretary last week, the Department of Expenditure highlighted the need to curb wasteful spending, particularly due to duplication of efforts by multiple Ministries and the rising costs of administrative overheads and consultancy services.
The meeting marked the initiation of the five-yearly evaluation process for CSs and CSSs, with the Ministry emphasizing that no scheme will be considered for continuation without a comprehensive evaluation. The Department has already issued generic Terms of Reference (ToRs) for evaluating ongoing schemes nearing the end of their current approval cycle.
314 Schemes Under Review
A total of 54 Centrally-Sponsored Schemes and 260 Central Sector Schemes are lined up for review. These span critical sectors such as health, education, agriculture, tribal welfare, water and sanitation, urban and rural development and scientific research.
The budgetary allocation for continuing schemes will be based on a calculated average of expenditures between FY 2021-22 and FY 2024-25, multiplied by a factor of 5.5. Ministries will be allowed to reallocate resources internally between schemes based on need, but must submit a consolidated Cabinet note for all schemes proposed for continuation.
Emphasis on Fiscal Discipline
Officials said the appraisal will take into account broader macroeconomic goals, including a nominal GDP growth rate of 10.1%, tax buoyancy of 1.07%, and the government's commitment to reduce the debt-to-GDP ratio to around 50% by FY 2031. This implies a need to create fiscal space for new and emerging priorities, while curbing non-essential or underperforming schemes.
Five-Pronged Evaluation Framework
Under the policy framework for appraisal, five key parameters will guide decision-making:
- Findings and recommendations from independent evaluations.
- Alignment of the scheme with intended outcomes and deliverables.
- Integration of State-level initiatives.
- Transition from infrastructure creation to sustainability and service delivery.
- Flexibility to merge smaller schemes and customize components to State-specific needs.
An official noted that schemes that have achieved their physical infrastructure targets must now pivot towards softer, outcome-oriented interventions, such as improving service quality and long-term impact.
This move is in line with the Centre's long-standing policy goal of improving public expenditure efficiency and ensuring that taxpayer money is used in schemes that deliver measurable results and address contemporary needs.
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