Central Government Launches Appraisal of Centrally Sponsored and Central Sector Schemes
By Aaerm Law Associates | May 31, 2025
The Government of India has launched the five-year appraisal and approval process for Centrally Sponsored Schemes (CSSs) and Central Sector Schemes (CSs). This initiative, led by the Department of Expenditure in the Ministry of Finance, aims to improve how public funds are spent by aligning ongoing schemes with national development goals.
Kickoff: Workshop Marks Start of the Evaluation Cycle
On May 29, 2025, senior officials gathered for a half-day workshop to begin this extensive review process. Cabinet Secretary Dr. T.V. Somanathan chaired the event. Finance Secretary Shri Ajay Seth, Expenditure Secretary Shri Vumlunmang Vualnam, and Secretaries from key Ministries attended the session. Financial Advisors and senior officers were also present.
The goal is to assess CSSs and CSs set to end on March 31, 2026, and prepare for the next five-year cycle beginning April 1, 2026. This timeline aligns with the 16th Finance Commission.
Why This Matters: A Policy with Purpose
The government first proposed scheme evaluations and fixed end dates during the 2016 Union Budget. Since then, all schemes have required an outcome review before renewal. Independent third-party agencies conduct these evaluations.
At the workshop, the Cabinet Secretary urged Ministries to take a hard look at scheme performance. He emphasized using evaluations to redesign programs, eliminate wasteful components, and shut down schemes that no longer serve a purpose.
By doing so, the government hopes to make better use of limited financial resources.
What’s Under Review? The Scope Is Wide
Officials will evaluate 54 CSSs and 260 CSs. These cover a broad range of sectors, including:
- Health
- Women and child development
- Tribal affairs
- Education
- Agriculture
- Urban and rural infrastructure
- Water and sanitation
- Environment
- Scientific research
The Department of Expenditure also gave an overview of available funds. It explained how resource allocation would be determined for the next financial cycle.
How CSSs and CSs Differ
Central Sector Schemes (CSs) are fully funded by the central government. In contrast, Centrally Sponsored Schemes (CSSs) involve cost-sharing between the Centre and the states.
This cost-sharing model ensures state involvement while allowing the Centre to steer national priorities. The dual responsibility also promotes better monitoring and accountability.
Strategic Goals: Key Priorities Guiding the Appraisal
The government outlined several guiding principles for the appraisal:
- Challenge mode financing will promote innovative funding and performance-based incentives.
- Aadhaar-based Direct Benefit Transfers (DBT) will ensure benefits reach the right people efficiently.
- Scheme convergence will combine similar programs to amplify impact and avoid duplication.
- Performance-based reviews will help phase out ineffective or redundant programs.
- Conditional funding will encourage states and departments to push key reforms.
- India @100 vision alignment will ensure long-term relevance of schemes.
Officials also emphasized “just-in-time” fund releases to prevent money from sitting idle in accounts. By doing so, the government can redirect savings toward newer or more impactful programs.
Evaluation Mechanism: Who Does What?
Two major bodies are responsible for the evaluations:
- NITI Aayog’s Development Monitoring and Evaluation Organisation (DMEO) handles evaluations for CSSs.
- Third-party agencies selected by individual Ministries assess the CSs.
These evaluations will look at scheme performance, implementation quality, and real-world impact. Ministries must then use these findings to redesign, merge, or discontinue schemes as needed.
Expected Outcomes: Making Every Rupee Count
This review is not just a formality. The government expects several tangible results:
- Streamlined schemes: By cutting out overlaps, the Centre can focus on programs that truly deliver.
- Smarter fund allocation: Future budgets will reflect data-driven decisions.
- Better targeting: Programs will reach intended beneficiaries more effectively.
- Stronger implementation: Learnings from past successes and failures will inform better strategies.
- Improved governance: The emphasis on outcome-driven decisions supports long-term national goals.
In previous review cycles, such evaluations helped boost capital expenditure. The 2025–26 budget allocates ₹11.21 lakh crore to capital investments, reflecting a commitment to meaningful spending.
Conclusion: Accountability and Impact at the Core
By launching this five-yearly review, the Indian government shows its dedication to efficient governance. The focus on performance, evaluation, and strategic redesign ensures that taxpayer money works harder and smarter.
Ultimately, this initiative aims to create high-impact, well-targeted, and future-ready schemes. It also reflects the government’s broader mission: building an inclusive, sustainable, and self-reliant India by 2047.
