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Informist, Tuesday, Jan. 6, 2026

 

NEW DELHI – The finance ministry's Department of Expenditure is in the process of rationalising or consolidating centrally sponsored schemes and central schemes, as required, to ensure a more targeted approach to public spending, according to a senior ministry official. The expenditure department has directed departments under various ministries to study the schemes they administer and suggest a list of schemes that can either be discontinued or merged with a similar scheme, the official said. 

 

"Generally, CS and CSS have a cycle – mostly five-year cycles which get extended – and the latest cycle ending FY26 (2025-26 (Apr-Mar)) involved the COVID-19 pandemic, political aspirations, and geopolitical events. Instead of running all schemes that may have been launched to address different problems, or give different support as was needed, it is ideal to have lesser but better schemes," the official told Informist. 

 

There are 54 centrally sponsored schemes and 260 central schemes that have their terminal date of approval till Mar. 31. The schemes cover wide-ranging sectors such as health, women and child development, school and higher education, tribal welfare to agriculture sector, urban and rural infrastructure, water and sanitation, environment, trade and scientific research. While central schemes are fully funded by the Centre, costs are shared with states in the case of centrally sponsored schemes.

 

The finance ministry's move is also aimed at better expenditure management to ensure the quality of spending is maintained and that there is minimal leakage. "The more the number of schemes, more are the chances of leakage. Multiple schemes, despite their similar intent, also need separate allocations, so this will eventually help cut the total outgo but will continue give support," the official said.

 

The timeline of the current cycle of schemes also coincides with new fiscal priorities and new finance commission cycle. "Central schemes take into account fiscal scope and finance commission recommendations to help address state, central level fiscal conditions," the official said. 

 

The government has projected its fiscal deficit for FY26 at 4.4% of GDP, marking the last leg of the fiscal consolidation roadmap in line with the 15th Finance Commission's recommendation. For FY27, the Centre has announced its intent to shift its fiscal consolidation benchmarking to metrics favoured by international rating agencies such as the debt-to-GDP ratio and interest expenses.

 

According to the Budget document for FY26, the government aims to keep the fiscal deficit at a level each year such that the central government debt will be on a declining path as a percentage of GDP. Its target for fiscal consolidation is that the Centre's debt is 50% of GDP, plus or minus 1%, by FY31. The government debt is projected to reach 56.1% of GDP at the end of FY26.

 

The 16th Finance Commission – which submitted its report to the President in November – was mandated to determine the formula for states' share of central taxes and grants-in-aid for five years starting FY27. In the past, finance commissions have made suggestions on which central schemes should be allocated for, or treated, for better Budget management of centre and states.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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