Central Schemes must pass ‘effectiveness’ test to continue

Paper: GS – II, Subject: Governance, Topic: Government Policies, Issue: Central Sector and Sponsored Schemes.

Context:

The Finance Ministry has issued a circular on June 6th, outlining new criteria for the continuation of government-funded-Schemes, whether fully or partially supported by the Union government.

• These criteria are designed to ensure the effectiveness and efficiency of government spending.

Key Takeaways:

The Central sector-schemes?

• Central sector schemes (CSS) are schemes that are fully funded and implemented by the central government of a country, without any financial contribution from the state or local governments.

Centrally sponsored-scheme?

• These are schemes-that are funded partially by both the Central and State Governments.
• It is a channel which the central government uses to help the states run their plans financially. The amount of state participation varies from state to state.
• Their implementation rests on the Union territories and the States.
• These schemes-are further divided into three categories based on their funding patterns i.e. the core of the core, core and optional.

Finance Ministry’s Circular Overview:

Conclusion:

• This directive is a move toward performance-linked funding, ensuring accountability, better fiscal management, and rationalization of government spending.
• It encourages Ministries to focus on results, cut underperforming schemes, and optimize resources in line with national priorities.

https://www.thehindu.com/news/national/central-schemes-must-pass-effectiveness-test-with-positive-outcomes-to-continue-beyond-this-year-finmin/article69687085.ece

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