TV Somanathan: PFMS reforms will lead to higher savings in FY23 compared to last year

Finance Secretary TV Somanathan

Union Finance Secretary TV Somanathan on March 1 (Wednesday) said that savings in interest cost in FY23 on account of the public financial management system (PFMS) reforms of single nodal agency (SNA) will surpass Rs 10,000 crore compared to the previous financial year.

“(This financial year), we will surpass the savings made (in the) last fiscal. (We) still have to work out the maths for the exact savings in FY23 due to the SNA and treasury single account system,” Somanathan told reporters on the sidelines of the 47th civil accounts day.

SNA, with the transfer of funds, has provided a lot of efficiency gains in cash management. It has minimised the amount of money that used to lie idle in different organisations, states, and central agencies. These funds were borrowed by the Government of India on which interest was paid and was a cost to the Centre.

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“We were paying interest, but the funds used to lie idle, costing us, without benefiting the citizens. Now, with the SNA, the money is only released when the previous instalment is utilised. Many secretaries of state departments have given feedback that since they now know what central funds are released, they are able to use it more promptly,” he said in his address at the event.

Somanathan also emphasised the importance of timely payments, and said contractors and individuals need to be paid on time. Delayed payments breed stagnancy, he added.

The PFMS has to be transformed from a data-rich to data intelligence system using data analytics.

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“The SNA payments are to be made only for final use, and are not to be transferred to another bank account. Through the dashboard it has been found that some states are doing this. It needs to be corrected,” he said.

The core of the PFMS reforms is the just-in-time release of funds. Through the SNA dashboard, which was initiated in 2021, the ministries and departments are also able to monitor the movement and disbursal of funds.