The Finance Ministry has directed all ministries and departments to set clear ‘sunset clauses’ and timelines for each new Centrally Sponsored Scheme (CSS) and existing schemes to be launched under the 16th Finance Commission cycle starting April 1, 2026. The Finance Ministry has also sought additional information from all the ministries. This includes justification for continuing any scheme, actual expenditure versus budget allocation in the last five years, fund-flow from the central pool to the ultimate beneficiary and the number of posts created specifically for the scheme after valuation of each CSS.
More information has to be given
ET has mentioned a letter in its report. Which has been sent by the Finance Ministry to all the ministries. The Department of Expenditure under the Finance Ministry issued instructions in the first week of December, asking ministries and departments to revise their evaluation reports, incorporate new details and submit updated editions by the first week of January.
Officials said the additional information is aimed at quantitatively evaluating the scheme’s performance, identifying ministries that have repeatedly failed to meet expenditure targets, and detailing the flow of funds so that the exact time taken for approval and release can be known. The ministries were earlier supposed to submit their reports by the end of December, but in view of these additional requirements, they have been given an additional time of one week.
What is a sunset clause and why is it important?
A senior official was quoted by media reports as saying that there are clear instructions that all schemes should have a sunset clause that assesses the financial burden on the exchequer and sets a roadmap and deadlines to achieve the results. This evaluation is done every five years. It reviews the performance, quality of expenditure, utilization of funds and outcomes of each scheme.
It also helps in eliminating unnecessary programs in a phasewise manner to optimize capex. As written in the letter, the same process will be adopted in the schemes to be reviewed by NITI Aayog. The letter further said that even where third party evaluation has been used, ministries will have to present their data, analysis and findings along with external reports.