New norms to appraise publicly funded schemes

Source: Business Standard, Aug 11, 2016

New Delhi: Publicly funded schemes will now need to have quantifiable outcomes and sunset dates, according to a new set of norms for their approval and appraisal.

The Union finance ministry on Wednesday issued the norms. This will help the government eliminate the difference between the existing Plan and non-Plan classification of expenditure at the end of the 12th Five-Year Plan (2012-2017). The new norms empower the central ministries by allowing ministers to approve expenditure proposals of up to Rs 500 crore, as against the earlier limit of Rs 150 crore.

They also stated that decisions for cost estimates in a range of Rs 500 crore to Rs 1,000 crore would be taken by the line minister and the finance minister jointly.Expenditure beyond Rs 1,000 crore would require clearance from the Cabinet or the Cabinet Committee on Economic Affairs.

“With the announcement, in the Union Budget for 2016-17, of doing away with Plan and non-Plan distinction at the end of the 12th Five-Year Plan, it has become necessary to put into place a neutral appraisal and approval system,” an official statement said.

“The Department of Expenditure has accordingly undertaken a comprehensive review of the instructions issued over the last three decades, and replaced them with a simpler framework, which will greatly improve the efficiency with which schemes and projects are appraised and approved in our system.”

Finance Minister Arun Jaitley had announced in his Budget speech that with the end of the last five-year Plan on March 31, 2017, the government would shift to a revenue and capital classification of expenditure. The sunset clause of a scheme was the same as the end of a five-year plan. That is set to change.

The new guidelines will help bring in the concept of outcome evaluation to improve the delivery of public goods and services to the citizens, the Ministry said in its statement, adding that this will be a part of the major expenditure reforms initiated by the government in the last two years.

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