States raise red flag on Centre’s move to monitor funds online

The upcoming Budget is likely to feature an announcement on rolling out the system across all states by the next financial year.

Written by Aanchal Magazine | New Delhi | Updated: February 19, 2016 4:15 am

Financial management system, Direct Benefit Transfer, budget 2016, upcoming Budget, PFMS, financila year, finance ministry, NRHM, india news, indian express

IN A BID to bolster the Direct Benefit Transfer (DBT) scheme, the Centre is pushing all state governments to switch to the Public Financial Management System (PFMS), an online platform that enables real-time tracking of fund disbursements till the gram panchayat-level.

The upcoming Budget is likely to feature an announcement on rolling out the system across all states by the next financial year. However, a number of states have flagged their reservations against what they fear will lead to “intrusive monitoring” of central funds through this platform.

“DBT is already being made through PFMS. But as the government intends to expand DBT for all its subsidy payments, all states will need to adopt PFMS and that’s why the Cabinet Secretariat is pushing for strengthening the platform,” said a senior government official.

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According to another official, “all government payments will ultimately be made through PFMS”. “The government is targeting to rope in all states under the platform by the next financial year,” the official said.

PFMS-state treasury interfaces have been completed for eight states, including Madhya Pradesh, Maharashtra, Odisha, Puducherry, Rajasthan, Assam, Uttar Pradesh and Kerala, officials said.

However, officials of a number of states, including Madhya Pradesh, have expressed concern over the “close monitoring” of funds, saying the Centre “may intervene in the independence of states”.


Also, officials said, if PFMS becomes mandatory, the determination of the “last beneficiary” in many schemes will be at the discretion of the official at the lowest level, which raises the possibility of pilferage.

Officials from states such as West Bengal have, meanwhile, cited the unavailability of manpower and lack of “handholding” from the Centre as reasons for stalling the progress of PFMS in all states.

When contacted, an official associated with PFMS acknowledged some of the concerns raised by states, especially when it comes to determining the last-level beneficiary, but added that such issues were “conditional upon the nature of the scheme”.

“Schemes such as scholarship, pension and ICDS (Integrated Child Development Services) covering anganwadi centres, where direct beneficiaries are much easier to identify and include under the PFMS platform. This may not be the case for some other schemes,” the official added.

PFMS is being implemented by the Controller General of Accounts (CGA) for tracking of funds released under all Plan schemes of the central government and real-time reporting of expenditure at all levels of programme implementation through the treasury-bank interface. Since October 2015, it is also being used for disbursal of non-plan funds.

The government is also considering the option of including State Disaster Response Fund (SDRF) in PFMS to help manage it more efficiently, an official said.

Apart from the eight states where treasury interfaces have been rolled out, 12 other states have been asked to link their electronic funds management system or eFMS for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) with PFMS, an official said.

PFMS is, however, being used as the platform in many states for schemes where the identification of beneficiaries is direct such as scholarship and pension schemes.

“All payments for scholarship schemes for students and NRHM (National Rural Health Mission) are being made through PFMS in our state. Under NRHM, the government is monitoring fund utilisation for all district health societies in the state,” said an official from Uttar Pradesh.

Central officials, however, clarified that the upcoming rollout of kerosene subsidy from April 1 will not be through PFMS.

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