Syllabus: GS2/ Governance
In News
- The Department of Expenditure, Ministry of Finance has initiated a comprehensive exercise to appraise and approve Centrally Sponsored Schemes (CSSs) and Central Sector Schemes (CSs) for continuation post March 2026.
- This aligns with the 16th Finance Commission cycle starting 1st April 2026.
About
- The foundation of this appraisal exercise lies in the 2016 Union Budget, which formally introduced the policy of assigning a sunset clause and outcome-based evaluation for every centrally funded scheme.
- The goal was to ensure that no scheme continues indefinitely without proven effectiveness and relevance.
- For Centrally Sponsored Schemes (CSSs), the Development Monitoring and Evaluation Organisation (DMEO) under NITI Aayog is responsible for conducting evaluations.
- For Central Sector Schemes (CSs), the concerned ministries select third-party agencies to assess outcomes and performance.
Significance of the Reappraisal Exercise
- Outcome-Driven Governance: Aligning schemes with measurable outcomes through third-party evaluations ensures evidence-based policymaking.
- It eliminates continuation of underperforming or redundant schemes.
- Fiscal Consolidation and Optimal Resource Use: Helps contain revenue expenditure and create fiscal space for capital-intensive projects.
- Example: Capital expenditure for FY 2025–26 (BE) stands at ₹11.21 lakh crore, enabled by similar rationalisation in the past.
- Scheme Convergence and Efficiency: Integration of overlapping schemes reduces duplication, administrative costs, and enhances synergies (e.g., health + nutrition + WASH).
- Digital Targeting and DBT Integration: Linking schemes with universal Aadhaar-based DBT enhances transparency, reduces leakages, and ensures last-mile delivery.
- India @100 Vision Alignment: Facilitates policy alignment with long-term developmental goals such as infrastructure, health, education, and innovation.
Challenges in Recalibrating Schemes
- Political and Federal Sensitivities: States may resist merger or closure of schemes due to regional priorities or electoral concerns.
- CSSs often involve shared finances—creating friction over cost-sharing ratios.
- Institutional Inertia and Bureaucratic Resistance: Ministries may be reluctant to let go of legacy schemes due to vested interests or fear of budget cuts.
- Evaluation Limitations: Quality and neutrality of third-party evaluations vary; some schemes lack robust data for review.
- Implementation Gaps: Even well-designed schemes fail due to weak implementation capacity, especially at district and local levels.
- Transition Risks: Phasing out schemes without adequate transition planning may disrupt service delivery.
Way Forward
- Strengthen Evaluation Frameworks: DMEO-NITI Aayog and Ministry-appointed agencies must adopt uniform standards, real-time MIS integration, and participatory evaluation.
- Foster Centre-State Coordination: Transparent dialogue and incentive-based funding to secure state buy-in for scheme redesign.
- Digital Infrastructure for Scheme Monitoring: Expand platforms like PFMS and JanSamarth to track disbursements, outputs, and impact.
| Aspect | Centrally Sponsored Schemes (CSSs) | Central Sector Schemes (CSs) |
|---|---|---|
| Funding Pattern | Shared between Centre and State Governments. [60:40 (General States), 90:10 (NE and Himalayan States)] | Fully funded by the Central Government (100%) |
| Implementation | Implemented by State Governments | Implemented directly by Central Ministries/Departments |
| Constitutional Jurisdiction | Focuses on State List and Concurrent List subjects | Focuses on Union List subjects |
| Control | Joint control – Centre provides guidelines; States execute | Central control – planned, executed, and monitored by Centre |
| Objective | To ensure national development with state involvement | To implement strategic or priority initiatives of national interest |
| Examples | MGNREGA, ICDS, PMAY-G, NHM, Samagra Shiksha | BharatNet, PM-KUSUM, INSPIRE, DRDO R&D schemes |
Source: TH
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