The finance ministry is considering a proposal of weeding out a host of centrally sponsored schemes, which have outlived their utility, while rationalising important social schemes in the budget to cut expenditures by Rs 5,500 crore (Rs 55 billion).

The scrapping of many schemes would also mean downsizing many government departments, which would enable the UPA government to focus on key social schemes.

The finance ministry has short-listed as many as 80 schemes under 33 ministries and departments, official sources said, adding many of them may be discontinued or merged with other schemes or transferred to states.

The restructuring of social schemes could save non-plan expenditure by Rs 5,500 crore and enhance budgetary support to other important schemes, an official said.  The government spends as much as Rs 36,000 crore (Rs 360 billion) annually on some 200 CCSs, and a significant portion of the amount is transferred to the states in the form of grants.

Finance minister P Chidambaram had earlier indicated that some of the CSSs could be transferred to states.

The National Advisory Council, headed by UPA chairperson Sonia Gandhi, has also favoured the move, and has asked the Planning Commission to sort out CSSs that could be removed and the money used to fund other social schemes as mentioned in the Common Minimum Programme.

The NAC has suggested restructuring and clustering of CSSs to attain the millennium development goals on issues ranging from poverty reduction, primary education and combating dreaded diseases like HIV/AIDS.