Finance Ministry Limits Outlay for Pending Schemes Until 16th Finance Commission Approval

The finance ministry has capped expenditure on central sector schemes and centrally sponsored schemes, awaiting appraisal and approval under the 16th Finance Commission cycle.  

This interim measure allows these schemes to continue only through the first 6 months of the current financial year. 

Interim Funding Arrangements 

This measure was enacted after several ministries failed to complete the mandatory appraisal of these schemes by the March 31 deadline.  

The Centre permits the interim execution of these initiatives till September 30, or until they secure formal approval.  

Allocations for these schemes will be limited to the initial 2 quarters of the fiscal year. This means that any spending must be adjusted within the ministry’s existing budget allocations 

Department of Expenditure's Role 

The Department of Expenditure (DoE) issued a communication to ministries last month urging them to conclude appraisal processes before September.  

The DoE will in September reassess allocations based on scheme continuation, restructuring, or consolidation across ministries.  

All adjustments will be kept within existing budgetary constraints, ensuring no fiscal disturbance for the 2026-27 period. 

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Scheme Review Process 

The temporary extension affects schemes awaiting appraisal. Until formal approvals are given, such schemes will maintain the same scope and terms as during the 15th Finance Commission period.  

No alterations in design or entitlements will be made. The review aims to streamline initiatives, phase out those that met objectives, and redirect funds toward priorities. 

Budget Allocations and Targets 

The government has budgeted ₹5.48 lakh crore for central sector schemes, accounting for roughly 45% of planned capital expenditure.  

The appraisal process happens every 5 years to help streamline schemes and direct funds effectively.  

Any new, merged, or phased-out schemes will undergo adjustment within prevailing financial constraints without increasing the overall budget. 

Conclusion 

The finance ministry’s interim cap on expenditure for schemes lacking appraisal by the 16th Finance Commission ensures financial prudence while allowing continuation under existing conditions. This directive allows ministries to manage their budget allocations effectively without impacting fiscal discipline. 

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