Efficient Public Financial Management in India
The effective management of public financial resources is crucial for a large federal country like India. Efficient spending ensures that funds are utilized optimally to improve economic outcomes.
Introduction of the Single Nodal Agency (SNA) System
- The Indian government introduced the Single Nodal Agency (SNA) system in 2021 to enhance transparency and efficiency.
- The SNA system ensures a “Just-in-Time” release of funds from central and state consolidated funds, utilizing an integrated network.
- This system addresses issues of unspent funds in centrally sponsored schemes (CCS) by consolidating government accounts and integrating treasuries.
Impact of the SNA System
- Finance Minister Nirmala Sitharaman emphasized rolling out SNA Sparsh for all schemes in the next financial year, highlighting its benefits to states.
- The SNA system has reportedly saved the government over ₹11,000 crore since its inception in 2021-22.
- It ensures timely availability of funds, reducing fiscal deficits and unnecessary interest payments on unused funds.
- The Union Budget included, for the first time, a statement on the status of SNA accounts, revealing about ₹1 trillion from CCS lying unspent in state accounts.
Challenges and Recommendations
- Despite funds being transferred, they often remain unspent, indicating a need for understanding state-level challenges.
- There is a potential case for rationalizing the number of CCS to align them better with state priorities.
- States advocate for an untied flow of resources from the Centre for greater flexibility in program design.
- The Finance Commission could recommend an optimal balance in resource allocation.
