States subsidy accounting must be transparent – CAG

States subsidy accounting must be transparent – CAG

Subject : Polity

Section: National body

Concept :

• The Comptroller & Auditor General (CAG) of India, Girish Chandra Murmu, on Monday said the States must take measures to maintain proper accounting of subsidies, reduce fiscal deficits, remove revenue deficits and keep outstanding debts at an acceptable level.
• Details
• There are fiscal sustainability risks and financial indiscipline in many States due to off-budget borrowings, misclassification of revenue expenditure as capital expenditure and because state guarantees are not getting captured in finance accountin
• These factors make qualitative and timely preparation of accounts by the CAG difficult.

Constitutional Mandate

• Article 150 of the Constitution mandates that the accounts of the Union and of the States has to be kept in a manner as prescribed by the President on the CAG’s advice.
• Section 10 of the Duties, Powers and Services Act also empowers the CAG to compile accounts of the central and State governments.

Integrated Financial Management System (IFMS)

• It is a web-based solution designed to bring efficiency in financial planning and expenditure control in the States.
• This portal has brings various stakeholders such as Department of Finance, Treasuries, Administrative Departments, Accountant General (AG), RBI and Banks on a single platform with role based Smart Dashboards.
• Smart Dashboards have provided a better Decision Support System to all the stakeholders.

Public Financial Management System (PFMS)

• The Public Financial Management System (PFMS), earlier known as Central Plan Schemes Monitoring System (CPSMS), is a web-based online software application developed and implemented by the Office of Controller General of Accounts (CGA), Ministry of Finance.
• PFMS was initially started during 2009 as a Central Sector Scheme of Planning Commission with the objective of tracking funds released under all Plan schemes of the Government of India, and real time reporting of expenditure at all levels of Programme implementation.
• Subsequently in the year 2013, the scope was enlarged to cover direct payment to beneficiaries under both Plan and non-Plan Schemes.
• In 2017, the Government scrapped the distinction between plan and non-plan expenditure.
• The primary objective of PFMS is to facilitate a sound Public Financial Management System for the Government of India (GoI) by establishing an efficient fund flow system as well as a payment cum accounting network.
• At present, the ambit of PFMS coverage includes Central Sector and Centrally Sponsored Schemes as well as other expenditures including the Finance Commission Grants.
• PFMS provides various stakeholders with a real time, reliable and meaningful management information system and an effective decision support system, as part of the Digital India initiative of GoI.
• PFMS is integrated with the core banking system in the country.
• Implementation of the Public Financial Management System (PFMS) by the Central government had wide implications for State accounting so far as sanctions of State grants, funds transfer and monitoring were concerned.