Finance Ministry Directive on Centrally Sponsored Schemes

The Finance Ministry has mandated all ministries and departments to establish sunset clauses and timelines for new and existing centrally sponsored schemes (CSS) under the 16th Finance Commission cycle starting April 1, 2026.

Requirements for Ministries and Departments

• Appraisal Reports:
  • Ministries must revise appraisal reports to include new details and submit them by the first week of January.
  • Additional disclosures are required regarding: 
    1. Rationale for continuing any scheme.
    2. Actual expenditure versus budget allocations over the past five years.
    3. Fund-flow trail from the central pool to the final beneficiary.
    4. Number of posts created exclusively for the scheme.

Objective of Additional Information

• Quantify scheme performance.
• Identify ministries that have consistently underperformed on spending targets.
• Detail the movement of funds, showing the exact time taken for approvals and releases.

Sunset Clauses and Fiscal Responsibility

• All schemes must include a sunset clause to assess the fiscal burden on the exchequer.
• The clause should outline a roadmap and timeline for achieving specified outcomes.

Review and Evaluation Process

Every five years, an appraisal reviews the performance, quality of expenditure, utilisation of funds, and outcomes of each scheme. The aim is to phase out redundant programs and optimize public spending.

Even with third-party evaluations, ministries must submit their own data, analysis, and findings alongside external reports.