Budget spending is tied to execution capacity, not theoretical targets, Expenditure secretary V. Vualnam said. The focus is on efficiency and quality of expenditure, Vualnam told Prasata Sahu and KG Narendranath.
Q. How has the SNA SPARSH system improved expenditure management in centrally sponsored schemes?
The SNA (Single Nodal Agency) SPARSH framework operates through the Public Financial Management System (PFMS), integrating the Centre, state governments, the Controller General of Accounts (CGA), and the Reserve Bank of India (RBI) on a single digital platform.
Once an expenditure is due, the state initiates the request digitally. After verification by the concerned central ministry, funds are cleared online and routed through RBI-linked accounts. The Centre’s and state’s shares are automatically aligned according to the funding pattern and released directly to beneficiaries or vendors.
This just-in-time system ensures that funds do not remain parked at intermediate levels such as state treasuries or nodal bank accounts.
Q. What savings has the reform led to?
Previously, large sums — estimated at Rs 1 lakh to Rs 1.5 lakh crore — used to remain idle across multiple layers, including state treasuries, scheme nodal accounts, and district-level implementing agencies. This “float” represented inefficiency and imposed a borrowing cost on the Union government.
Under SNA SPARSH, idle parking has effectively been eliminated, and money moves only when expenditure is actually due. The earlier SNA model, linked to bank accounts, still has residual balances of about Rs 60,000 crore, but these are being phased out.
On revised expenditure
Q. Why is revised expenditure on Centrally Sponsored Schemes lower by about Rs 1 lakh crore this year?
Revised Estimates are based on actual utilisation trends and departments’ spending capacity. Around 50 schemes are now on the SNA SPARSH platform, where expenditure is counted only when funds reach the final recipient. This prevents the overstatement that earlier arose from funds being released but not spent. The shift to outcome-based accounting has made expenditure figures more realistic.
Q. Total expenditure as a percentage of GDP has declined further.. As a developing country, we need much higher government resources and public spending…
Budget allocations are aligned with implementation readiness rather than theoretical spending targets. Departments’ projections are assessed based on past trends and the capacity to execute projects. New schemes typically take time to gather pace. The emphasis is on efficient, high-quality spending. At the same time, capital expenditure has increased significantly, with an outlay of Rs 12.2 lakh crore next year.
On uneven math of MGNREGA successor scheme
Q. Why is allocation higher at Rs 95,692 crore for FY27 under the revamped rural employment scheme VBG-RAM-G despite a 40% state share mandate?
The higher estimate reflects an increase in guaranteed workdays to 125 per household from 100. In addition, Rs 30,000 crore has been provided under the old MGNREGA head to clear committed liabilities, subject to verification by the Rural Development Ministry.
Q. Open-ended food and fertiliser subsidies remain a fiscal burden. The allocations for fertiliser subsidy for FY27 are lower compared to FY26. This could require some increase in urea prices. A review of the National Food Security Act beneficiary pool may also be in order…
Subsidy reform, including in fertiliser subsidy, is a work in progress. Our soil is getting spoiled. On the other side, in food grain production, we are going beyond what is required. Oil seeds, pulses, all these that we require, we are importing. So here again an anomalous situation is there.
Q. How will the Rs 2 lakh crore capex loan to states be structured?
About 60% of the facility will be tied to reform-linked conditions, encouraging states to undertake specified structural improvements.