PAC stresses fiscal prudence in implementing Public Financial Management System


The Public Accounts Committee’s 54th report on the “Implementation of Public Financial Management System” was presented by PAC member Satya Pal Singh on behalf of chairperson Adhir Ranjan Chowdhury. Photo: Twitter/@dr_satyapal

The Public Accounts Committee (PAC), in its 54th report on the “Implementation of Public Financial Management System [PFMS]”, has stressed fiscal prudence in financial planning by incorporating scientific methods into budgeting, projecting and utilisation of funds.

The report was presented by PAC member Satya Pal Singh on behalf of chairperson Adhir Ranjan Chowdhury. Noting that the actual budgeting and year-to-year phasing of expenditure varied from the plan approved by the government, 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. The Ministry should take into cognisance the areas requiring further attention such as infrastructure development and HR policy and consider enhancing the budgetary provisioning and expenditure in these areas, it said.

New threats

Stating that initiatives should be taken to attract domain technical experts, the PAC noted that no human resource policy defining roles and responsibilities, as recommended in the guidelines, had been framed. It observed that 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.

The committee found that 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. Highlighting the critical nature of the PFMS and concerns over data security, it stressed the 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.

The committee recommended that a senior-level review committee (SLRC) should meet not only more frequently but also at fixed intervals; and that the SLRC should be sufficiently empowered to address issues of overall planning and representation of domain experts. It also suggested a need for guidelines to ensure proper management of strategic assets.

The PAC observed that 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. The committee said 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.



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