Evaluation process ongoing; overhaul unlikely before new financial year
The schemes were expected to be restructured and implemented in a revised format from the start of the next financial year to align with the cycle of the Sixteenth Finance Commission, which begins on April 1. However, the evaluation process is still underway, prompting the Centre to consider giving ministries additional time to finalise the redesign.
The government is reluctant to rush the restructuring exercise as ministries are still examining third-party evaluation reports and deliberating on key aspects of the proposed overhaul.
As a result, the existing schemes may continue temporarily in their current format at least until the first quarter of the next financial year while ministries complete the review and finalise decisions on the future of each programme.
“All evaluation reports have now been received by the central ministries and based on these, they will decide which schemes should continue, which should be merged and which may require redesign,” said a senior government official, who did not wish to be identified. “However, we do not want to rush them as we want this review to be well thought out and not done in haste.”
The ongoing review covers both central sector schemes and centrally sponsored schemes, which together form a major part of the Union government’s development spending. While central sector schemes are fully funded and implemented by the Union government, centrally sponsored schemes are jointly funded by the Centre and the states, and implemented by the states.
The ongoing exercise involves examining several structural changes, including rationalisation of subsidies, possible merger of overlapping social sector programmes and the introduction of mandatory sunset clauses for schemes to ensure periodic review and prevent programmes from continuing indefinitely.Under the new framework, ministries will also be required to clearly justify the continuation of any scheme and demonstrate measurable outcomes before seeking approval to extend it into the next finance commission cycle.
The Centre has budgeted about ₹5.48 lakh crore for central sector schemes for 2026-27, nearly 30% higher than the revised estimate of ₹4.20 lakh crore for the current fiscal. The allocation accounts for about 45% of the total capital expenditure planned for the next fiscal.
The government reviews centrally sponsored schemes every five years to assess their relevance and effectiveness, phasing out programmes that have achieved their objectives while redirecting funds to higher-impact initiatives.