The Public Accounts Committee (PAC) has tabled its 54th report on the “Implementation of Public Financial Management System [PFMS]”. The report was presented by PAC member Satya Pal Singh on behalf of chairperson Adhir Ranjan Chowdhury.
Key highlights of the report
- The report stressed fiscal prudence in financial planning by incorporating scientific methods into budgeting, projecting and utilisation of funds.
- The actual budgeting and year-to-year phasing of expenditure varied from the plan approved by the government.
- The tasks related to the implementation of the PFMS appeared to have been dealt with a casual approach and there was no proper financial planning of the process.
- No human resource policy defining roles and responsibilities, as recommended in the guidelines, had been framed. In the absence of a dedicated workforce, a key strategic system like the PFMS could possibly encounter new threats every now and then owing to the advancements in technology.
- Separate office infrastructure for the State project management units had not been created in any State and in most cases temporary space had been allotted by the State governments.
- In the absence of full coverage of all the Direct Benefit Transfer (DBT) schemes by the PFMS, its stated objectives for monitoring fund flow, enabling timely and tacit transfer of funds and ensuring transparent reporting in these schemes could not be ensured.
Recommendations to ensure fiscal prudence
- Incorporate scientific methods into budgeting, projecting and utilisation of funds would have ensured maintenance of fiscal prudence.
- Take into cognisance the areas requiring further attention such as infrastructure development and HR policy.
- Consider enhancing the budgetary provisioning and expenditure in these areas.
- Initiatives should be taken to attract domain technical experts.
- There is a need for a thorough assessment of physical and technical infrastructure along with back-up arrangements required in the PFMS scheme and necessary action to remedy the lacunae so identified, expeditiously.
- A senior-level review committee (SLRC) should meet not only more frequently but also at fixed intervals;
- The SLRC should be sufficiently empowered to address issues of overall planning and representation of domain experts.
- There is a need for guidelines to ensure proper management of strategic assets.
- The Ministry could pursue swift inclusion of all implementing agencies and integration of payment-transfer software within fixed timelines to ensure transparency, accountability and revenue saving.
- There should be thorough assessment of nature of the DBT scheme and its components prior to integration in the PFMS and a monitoring cell should also be created.
About Public Financial Management System (PFMS)
- Public Financial Management System (PFMS) is an ambitious project of Government of India being implemented byController General of Accounts, Ministry of Finance.
- The Government of India has introduced PFMS to bring accountability and transparency in the governance.
- PFMS provides platform for efficient management of funds through tracking of fundsand real time reporting of expenditure and receipts through Treasury and Bank Interface.
- The line ministries/ departments utilize this platform to monitor the utilization of funds provided to the implementing agencies and states governments.
- PFMS is also used for Direct Benefit Transfer (DBT) payments under MGNREGA and other notified schemes of the Government of India.
- The strength of the PFMS is its integration with the Core banking system in the country.
- As a result, PFMS has the unique capability to push online payments to almost every beneficiary/vendor.
- It also enables tracking of the fund flow from the Ministry to the executing agencies/vendors level and facilitate better accounting and financial monitoring.
