In order to build a growth friendly eco-system, financial processes and systems are as important as the fund allocations. The Department of Expenditure, Ministry of Finance has issued comprehensive guidelines on 5th August, 2016 for appraisal and approval of public funded schemes and projects.
With the announcement in the Union Budget, 2016-17 of doing away with Plan Non-Plan distinction at the end of the 12th Five Year Plan, it has become necessary to put into place a Plan Non-Plan neutral appraisal and approval system. 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. The new guidelines will help bring-in the concept of outcome evaluation to improve the delivery of public goods and services to the citizens. This will indeed be a part of the major Expenditure Reforms initiated by the present Government in the last two years.
The revised guidelines prescribe institutional arrangements and formats for appraisal and approval of schemes (program based costs centers for delivery of public goods and services) and projects (which involve one-time expenditure for creation of capital assets yielding financial/economic returns). The implementing Ministries have been delegated powers to appraise schemes and projects costing up to Rs. 500 crore through their Standing Finance Committee and Delegated Investment Boards respectively. Specific time frame for appraisal have been laid down for speedier decision making. The revised guidelines are forward looking and will help the Departments restructure their schemes in a framework that is independent of the Plan Non-Plan distinction.