PFMS reforms help govt save money through efficient cash management

PFMS reforms are aimed at interest cost savings for central government

In FY23, the Ministry of Information and Broadcasting and NITI Aayog effectively managed their funds by releasing money just in time, which resulted in savings of Rs 500 crore and Rs 90 crore, respectively. However, according to sources, the Ministry of Statistics and Program Implementation (MOSPI) performed poorly in managing its funds.

To address the issue of efficient cash management and transparency, the Finance Ministry launched the public financial management system (PFMS) reforms in July 2021. These reforms include the Treasury Single Account (TSA) system, Single Nodal Agency (SNA) for centrally sponsored scheme funds, and Central Nodal Agency (CNA) for central sector schemes.

Through the SNA dashboard, agencies under centrally sponsored schemes can track the transfer and utilisation of funds. This allows for the just-in-time release of funds and prevents money from lying idle, leading to savings for the government.

The SNA dashboard is part of the Azadi ka Amrit Mahotsav celebrations and aims to ensure better value for every rupee sent by the Centre for various schemes. About Rs 4.46 lakh crore is transferred to states via centrally sponsored schemes.

In FY22, the government was able to save about Rs 10,000 crore in interest costs due to the PFMS reforms. Finance Minister Nirmala Sitharaman and Finance Secretary T V Somanathan have both emphasised the importance of efficient cash management in containing fiscal deficit and minimizing interest expenditure.