North Block’s Sunset Push Exposes a Deeper Governance Crisis
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Sunset Clauses at Sunrise- Why the Finance Ministry’s Latest Directive Is More Than a Routine Ritual – And Still Not the Reform India Truly Needs
By P. SESH KUMAR
New Delhi, December 11, 2025 — Every December, North Block issues a familiar call to ministries: tidy up your Centrally Sponsored Schemes, justify their continuance, submit spending reports, and prepare for the next appraisal cycle. On the surface, the latest directive asking all ministries to attach sunset clauses to schemes and provide five-year performance details appears to be just another year-end circular with a new coat of paint.
But scratch that surface and a more complex picture emerges—a system still obsessed with expenditure rather than outcomes, a machinery that remains uncomfortable with genuinely independent evaluations, and a governance structure that rarely questions the design of schemes even as it blames states for poor implementation.
As India enters the 16th Finance Commission cycle, the Department of Expenditure seems eager to project fiscal discipline, yet the deeper reform India needs—objective third-party assessment, CAG-led policy audits (a no-go area since 2017?), and real accountability for administrative ministries—remains largely untouched.
A Directive That Feels Familiar -Yet Rings Louder Than Usual
Every winter, just as ministries begin to wind down the financial year, the Department of Expenditure sends out its ritual reminder to justify their schemes. It is almost a bureaucratic rite of passage: produce five-year spending data, explain budget variations, list physical outputs, ‘posts’ created and demonstrate why a scheme deserves to live another day. The language changes slightly, the appendices grow fatter, but the underlying exercise rarely changes.
The latest directive would have looked like one more entry in that well-rehearsed annual script but for two small lines that alter the tone: every scheme must have a sunset clause, and no scheme-old or new-gets to escape this requirement as India moves into the 16th Finance Commission cycle starting April 2026.
It is the insistence on sunset clauses that makes this circular different, because the government has long struggled with schemes becoming permanent fixtures regardless of relevance, outcomes, or duplication. Sunset clauses have been talked about for over a decade, yet ministries have treated them more as poetic metaphors than actionable timelines.
By explicitly directing every ministry to attach a roadmap, deadlines, and justification for continuance, the finance ministry seems determined to push for at least the appearance of fiscal pruning before the new Finance Commission cycle takes over.
Yet the directive still stops short of the deeper truth: without independent evaluation, sunset clauses become ornamental rather than transformative.
Still a Spending Game, Not an Outcomes Game
For all its bold phrasing, the circular continues to treat performance through the narrow lens of how much money has been spent versus how much was allocated. Ministries must report funds released, funds transferred, posts created, and speed of approvals—but not learning outcomes, health impacts, environmental benefits, citizen satisfaction, or long-term behavioural change. The weight of evaluation still rests on financial utilisation rather than real-world transformation.
The irony is unmistakable. Schemes that exhaust their allocations quickly are considered “successful,” while those that deliberately slow down because they discovered design flaws or field-level distortions are viewed as “underspending” and therefore “inefficient.” This reinforces a perverse incentive: spend fast, not spend well.
Ministries respond not by enhancing capacity but by artificially accelerating expenditure, hiring temporary staff, or pushing funds downward to states at the last minute.
A sunset clause built on the same expenditure-centric logic becomes an accounting exercise, not a policy assessment.
The Missing Backbone: Genuine Third-Party Evaluation
The directive requires ministries to submit third-party evaluation reports – but only alongside their own internal appraisal, and without any independent vetting of the evaluators themselves.
This circular reveals the persistent reluctance of the system to embrace evaluation that is external, professional, and fearless. India has world-class institutions in economics, public administration, data sciences, and social policy; the government, however, typically chooses ‘harmless’ empanelled bodies whose reports are rarely published, debated, or peer-reviewed.
By asking ministries to submit their own interpretation of third-party evaluations, the circular indirectly reasserts bureaucratic control over the narrative. What remains missing is a statutory requirement that all large schemes undergo rigorous, independently commissioned impact assessments with publicly available conclusions.
Without transparency and independence, evaluation becomes merely confirmatory rather than corrective. Assessments by NITI Aayog, if any, are rarely discussed in public domain.
Why the 16th Finance Commission Cycle Matters So Much
This is where the circular’s hidden urgency reveals itself. The 16th Finance Commission will re-evaluate the distribution of resources between Union and states, the role of Centrally Sponsored Schemes, and the fiscal space available for them. The finance ministry knows well that CSS proliferation has been a persistent complaint of state governments and Finance Commissions alike. Many schemes overlap; many demand co-financing; many generate administrative costs disproportionate to outcomes.
By enforcing sunset clauses before April 2026, the Department of Expenditure seems keen to put its house in order and present a cleaner, more rationalised CSS framework to the Finance Commission. The attempt is less about outcomes and more about optics — demonstrating readiness, fiscal prudence, and willingness to trim fat.
Whether real trimming will happen is doubtful, because ministries rarely volunteer to wind down schemes that give them visibility, political mileage, or control.
The Forgotten Angles of Accountability: Why CAG Must Step In
This entire episode exposes a deeper structural gap in India’s accountability ecosystem. While CAG routinely audits implementation lapses in schemes -delayed payments, ghost beneficiaries, paperwork deficiencies, procurement issues – it rarely examines whether the schemes themselves are designed well.
The truth is that many flagship schemes fail not because states implement them poorly but because central ministries write guidelines – mostly in a hurry without adequate consultation and that are unrealistic, opaque, or incompatible with state capacities.
For instance, performance-linked fund releases assume state machinery operates uniformly; rigid output metrics ignore regional variations; centrally designed IT platforms assume universal connectivity; recruitment conditions ignore state service rules.
The CAG’s audits of CSS often highlight the last-mile failures but seldom reflect upstream policy deficiencies. The latter approach has been quietly abandoned after 2017-18. This allows central ministries to escape scrutiny while states are portrayed as the perpetual scapegoats.
A more mature accountability framework would require the CAG to examine the conceptual and administrative architecture of schemes, monitoring adequacies in central Ministries, the adequacy of staffing sanctioned by the Centre, the feasibility of timelines, the quality of guidelines, and the responsiveness of central ministries to corrective feedback. In a federal system, accountability cannot be a one-way street.
Towards a Meaningful Reform: The Way Forward
If India genuinely wants sunset clauses to produce better governance rather than better paperwork, four actors must move together rather than in parallel.
The Department of Expenditure must shift from judging schemes by their spending velocity to judging them by measurable outcomes, independent assessments, and citizen experience. It must insist that ministries publish evaluation results, not bury them in appendices.
NITI Aayog must reclaim its original mandate of being the national think tank for evidence-based policymaking. It should lead impact evaluations using universities, research bodies, and international methodologies, rather than treating review exercises as compliance rituals carried out through ‘friendly’ agencies.
State governments must be treated not as implementers but as co-designers of schemes. Their feedback on feasibility, impact, duplication, and administrative burden must inform scheme redesigns.
The CAG must evolve beyond fault-finding and embrace policy-design audits. Without examining the conceptual flaws in CSS frameworks, India will continue blaming the symptom while ignoring the disease.
Only when these four institutions move in tandem will sunset clauses stop being ornamental punctuation marks in scheme documents and become actual instruments of public value.
The Larger Message
For decades, India has mastered the art of launching schemes but struggled to sunset them gracefully. The latest directive is a reminder that the real challenge is not announcing schemes but knowing when-and why-to let them go. A government that seeks to become lean, effective, and outcome-oriented cannot rely on expenditure spreadsheets alone. The 16th Finance Commission cycle offers a rare moment to rethink India’s sprawling welfare architecture. Whether this circular becomes the spark for genuine reform or simply the latest entry in an annual administrative ritual will depend on whether institutions like NITI Aayog and CAG step forward with the independence and intellectual honesty the moment demands.
(This is an opinion piece, and views expressed are those of the author only)
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