Public Financial Management System (PFMS)

Public Financial Management System (PFMS)

Subject :Economy

Context:

The Public Accounts Committee (PAC) presented a report on the “Implementation of Public Financial Management System [PFMS].

Details:

• The committee observed that 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.
• The committee held the view that incorporating scientific methods into budgeting, projecting and utilisation of funds would have ensured maintenance of fiscal prudence.

Concept:

The Public Financial Management System (PFMS)

• It was earlier known as Central Plan Schemes Monitoring System (CPSMS)
• It is a web-based online software application developed and implemented by the Controller General of Accounts (CGA), Department of Expenditure, Ministry of Finance
• PFMS was initially started during 2009 as a Central Sector Scheme of the 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, the scope was enlarged to cover direct payment to beneficiaries under all Schemes.
• Gradually, it has been envisaged that digitization of accounts shall be achieved through PFMS and later more financial activities of the Government of India brought under the ambit of PFMS.
• 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.
• 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.

The mandate:

• A financial management platform for all plan schemes, a database of all recipient agencies, integration with core banking solutions of banks handling plan funds, integration with State Treasuries and efficient and effective tracking of fund flow to the lowest level of implementation for plan schemes of the Government.
• To provide information across all plan schemes/ implementation agencies in the country on fund utilization.

The Public Accounts Committee (PAC) of Parliament

Public Accounts Committee was introduced in 1921 after its first mention in the Government of India Act, 1919 also called Montford Reforms. It is existing in the Indian Constitution since then.

• PAC is one of the parliamentary committees that examine the annual audit reports of CAG which the President lays before the Parliament of India. Those three reports submitted by CAG are:
  • Audit report on appropriation accounts
  • Audit report on finance accounts
  • Audit report on public undertakings
• The Public Accounts Committee examines public expenditure.
• That public expenditure is not only examined from a legal and formal point of view to discover technical irregularities but also from the point of view of the economy, prudence, wisdom, and propriety.
• The sole purpose to do this is to bring out cases of waste, loss, corruption, extravagance, inefficiency, and nugatory expenses.
• Election of Members -By Parliament every year with proportional representation by means of a single transferable vote (A minister cannot be elected)
• Members – 22. Out of 22 members, 15 are elected from Lok Sabha (Lower House) and 7 members are elected from Rajya Sabha (Upper House.)
• Term of office – one year
• Chairman – Speaker appoints him/her from amongst the members, invariably from the Opposition Party since 1967.
• Its limitation – It can keep a tab on the expenses only after they are incurred. It has no power to limit expenses.