The Centre stands to save a significant amount on interest costs when the Public Financial Management System is implemented, according to a senior official in the office of the Controller General of Accounts.
The electronic fund tracking mechanism will allow the government to monitor and access the more than Rs.1 lakh crore of idle funds lying with it under various heads, said the official, who did not wish to be identified.
The official also added that regardless of whether the Goods and Services Tax is implemented from April 2017 or not, the PFMS would be ready and will be integrated with the IT network of the GST by then.
Rs.7,000-crore savings
“There are about Rs.1-1.5 lakh crore of idle funds lying with the government,” the official said .
“Now, if the government can access these funds through PFMS, it need not borrow that amount. At 7 per cent interest, that works out to a saving in interest costs of at least Rs.7,000 crore.”
The PFMS platform compiles, collates and makes available in real-time, information regarding all government schemes, and, significantly, provides the government real-time information on resource availability and utilisation across schemes.
In addition, the platform will allow government expenditure to adopt a Just-in- Time (JIT) approach, with payments made only when they are needed.
Transformational change
“This will be a transformational change,” the official said, adding that the platform was mostly ready but would be rolled out from the next financial year. “Projects will not need a budget at the beginning of the year, which then has no transparency of how it is used and how much is left. They will be paid for only when payment is needed.”
The GST Network will provide the IT infrastructure for implementing the GST, which will be a nationwide tax and so will need to be integrated with the PFMS, the official added.
“It is very important that this happens,” he said. “And it will be done by April 2017 even if GST itself does not roll out from April.”
