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  1. Routing central funds via PFMS made mandatory

Routing central funds via PFMS made mandatory

In a move that would enable tracking and monitoring of the end-use of its funds, the Centre has made the use of Public Finance Management System (PFMS) mandatory for transfer of funds under the central-sector schemes, which account for 31% of the Budget.

By: | New Delhi | Updated: October 30, 2017 7:13 AM
The Centre has budgeted to spend Rs 6.67 lakh crore in FY18 under central sector schemes, up from Rs 6.21 lakh crore in FY17. (Image: Reuters)

In a move that would enable tracking and monitoring of the end-use of its funds, the Centre has made the use of Public Finance Management System (PFMS) mandatory for transfer of funds under the central-sector schemes, which account for 31% of the Budget. While 613 such schemes across all ministries are being covered under PFMS, the centrally sponsored schemes (CSSs), which account for another 12.95% of the Budget, may also be brought under PFMS gaze. The Centre has budgeted to spend Rs 6.67 lakh crore in FY18 under central sector schemes, up from Rs 6.21 lakh crore in FY17. It would also spend another Rs 2.78 lakh crore on CSS — where part contribution comes from states — in FY18, up from Rs 2.45 lakh crore in FY17. Finance secretary Ashok Lavasa on Friday said that more than 300 central and state government schemes are now riding on PFMS and payment of more than Rs 2.91 lakh crore relating to various schemes under DBT has been made through PFMS since 2013.

As on date, payments to 34.19 crore beneficiaries have been made through PFMS and there are 21.72 lakh programme implementing agencies registered on PFMS. The department of expenditure is administering the PFMS, which is an end-to-end online solution for processing payments, tracking, monitoring, accounting, reconciliation and reporting. The efficient fund management would help the Centre save on borrowing costs as well as on opportunity costs, officials said. Though joining PFMS was a must to get funds for central sector schemes, the Centre had not yet made it mandatory.

After missives last year to states through whom it implements CSSs, the Centre has now managed to integrate treasuries of all states except West Bengal into the PFMS to track fund utilisation up to the last mile as well as transfer funds ‘just-in-time’ for central schemes. This could help the Centre save `10,000 crore annually by ending floating of funds or idling of cash at banks, an official said. Integration of treasuries has virtually wiped out indefinite parking of central funds at the state level from over `1 lakh crore annually to virtually nil now.

West Bengal, which was opposed to integration of state treasuries with the PFMS, is also in the process of joining the platform, Lavasa said. Finance minister Arun Jaitley had said that the ultimate purpose of implementing any scheme is to ensure that the benefits much reach to the last mile. The Centre is now in the process of strengthening the technological platform and manpower to run the PFMS smoothly.

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