Public Finance

Jaitley Launches Mandatory use of PFMS for all Central Sector Schemes


Union Minister for  Finance and Corporate Affairs  Arun Jaitley has said that  the mandatory use of Public  Finance Management System  (PFMS) for all the Central Sector Schemes  of the Government of India would help in  tracking and monitoring the flow of funds  to the implementing agencies.

Mr Jaitley further said that due to the  monitoring of funds through PFMS, one  can know the actual status of utilization  of funds by the multiple implementing  agencies of the Central and the State  Governments. He said that the ultimate  purpose of implementing any Scheme is to  ensure that the benefits much reach to the  last mile. The Finance Minister specifically  mentioned about the implementation of  various Schemes through Direct Benefit  Transfer (DBT) mechanism in this regard.

 The Union Finance Minister was  addressing the senior Officers of the  Finance and other Ministries after launching  the mandatory use of the Public Finance  Management System (PFMS) for all Central  Sector Schemes in the national capital  today. These Central Sector Schemes  with a budgetary outlay of Rs 6,66,644  crore covers over 31 per cent of the total  Central Government expenditure during  the current financial year 2017-18.

Mr Jaitley further said that PFMS,  with the capability of providing real time  information on resource availability, flows  and actual utilization has tremendous  potential to improve programme/financial management, reduce the float in the  financial systems by enabling ‘just in  time’ releases and also the Government  borrowings with direct impact on interest  costs to the Government.

The Finance Minister said that with  the use of PFMS, there will not be much  paper work and it would go a long way in  monitoring and tracking of any unnecessary  parking of funds by the implementing  agencies and thereby minimizing the  cases of delay and pending payments to  a large extent. He hoped that soon PFMS  will progress towards a Government wide  Integrated Financial Management System  (GIFMIS) – as a comprehensive Payment,  Receipt and Accounting System.

The launch was done by Mr Jaitley in  the presence of the senior Finance Ministry  Officers and the Financial Advisers (FAs) of  different Central Government Ministries/ Departments. Finance Minister Jaitley  congratulated the officers and staff of the  Department of Expenditure and Controller  General of Accounts (CGA) in particular for  executing this initiative in a time bound  manner.

Earlier in his Welcome Address, Finance  Secretary Ashok Lavasa said PFMS would  not only help in complete tracking of funds  but would also ensure just in time transfer  of funds. He informed that 13 Central  Sector Schemes are now under PFMS. Mr  Lavasa said that PFMS picked- up great  momentum in last two years and all the  States are now on board with the Central  Government as far as acceptance of PFMS  is concerned.

He said that implementation of  Schemes through PFMS has brought  transparency in system and helped in  easy transfer and tracking of funds. 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.

PFMS has enabled the Government  in taking forward the ground breaking  initiative of Direct Benefit Transfers (DBT)  with collateral benefits of plugging leakages  and eliminating ghost beneficiaries, he  added.

The Finance Secretary also mentioned  that PFMS is poised to develop as one of  the biggest Financial Management Systems  of the world, which is critical for bringing  about a transformational accountability  and transparency in the Government  Financial Management Systems and  promoting overall Good Governance.

He said that 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. This has been  achieved on the strength of PFMS having  an interface with 170 Banks including the Reserve Bank of India (RBI).

The Finance Secretary also said that  for the first time, Annual Accounts of  the Central Government for the Financial  Year 2016-17 have been signed before  31st October, 2017. He said that there  is an integration of all State Government  Treasuries except that of the State of West  Bengal, which is also under process.

Considering the massive preparatory  work required for achieving full PFMS  implementation including software/ hardware up-gradation, fulfilling training  needs at every level of the Government  and enabling smooth on-boarding by the  State and UT Governments, the Central  Government decided in favour of a  phased and calibrated roll-out for smooth  implementation.

In that direction, the Central Sector  Schemes of the Government of India,  numbering 613 across all civil Ministries/ Departments were decided to be covered  on priority with simultaneous thrust  kept on the other important category of  Centrally Sponsored Schemes.

The targets for complete PFMS onboarding of 613 Central Sector Schemes  were also prioritized with 14 high spending  Ministries taken on priority with the initial  target date of completion by 31st August,  2017. The preparatory work in other  Ministries/Departments have also been  completed.

The PFMS Scheme has been rolled-out  by the Controller General of Accounts  (CGA) at the behest of Finance Ministry,  Department of Expenditure as a cherished  Public Finance Management (PFM) reform  in the country.

The Scheme aims at promoting  transparency and bringing about tangible  improvements in the overall Central  Government Financial Management  as well as implementation of various  Central Government Schemes across the  country. The ambit of PFMS coverage  includes Central Sector and Centrally  Sponsored Schemes as well as other  expenditures including the Finance  Commission Grants.

Considering the diversity and  multiplicity of channels through which  money is spent/transferred (including  through Direct Benefit Transfer), the PFMS  is designed to serve the pertinent need of  establishing a common electronic platform  for complete tracking of fund flows from  the Central Government to large number  of programme implementing agencies,  both under Central Government and the  State Governments till it reaches the final  intended beneficiaries.

PFMS thereby enables real time  monitoring of disbursements and utilization  of funds which in turn provides a sound  Decision Support System across Ministries  and Departments of Government of  India as well as all the State and UT  Governments.

Funds under the Centrally Sponsored  Schemes flow almost entirely to the State  Government treasuries and a substantial  part of the funds under the Central Sector  Schemes are also spent in the States  through various Central Government  agencies.

The improvements brought-out in the  Management of Public Funds through  PFMS, it was stated, will have a cascading  beneficial impact on the management of  State Government Public Finances as well  as efficient delivery of Public Services by  the States. PFMS, therefore, reflects the  true spirit of Co-Operative Federalism with  the Centre and the State Governments  combining their efforts to improve Public  Finance Management for ultimate public  good.

The mandatory PFMS on-boarding for  the remaining Schemes and Programmes  including the Centrally Sponsored Schemes  is also targeted to be achieved in a phased  manner.

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