Strengthening Public Financial Management System (PFMS)
Post on 02,March 2017   5:00 AM
By - PolyEyes Staff
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What is PFMS?

Public Financial Management System (PFMS) initially started as a Plan scheme named CPSMS of the Planning Commission in 2008-09 as a pilot in four States of Madhya Pradesh, Bihar, Punjab and Mizoram for four Flagship schemes e.g. MGNREGS, NRHM, SSA and PMGSY.

After the initial phase of establishing a network across Ministries / Departments, it has been decided to undertake National rollout of CPSMS (PFMS) to link the financial networks of Central, State Governments and the agencies of State Governments.

The scheme was included in 12th Plan initiative of Planning Commission and Ministry of Finance.

PFMS, administered by the department of expenditure, is an end-to-end solution for processing payments, tracking, monitoring, accounting, reconciliation and reporting

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 utilization across schemes.

Now, there are about Rs.1-1.5 lakh crore of idle funds lying with the government under various heads. If the government can access these funds through PFMS, it need not borrow that amount. At 7% interest, that works out to a saving in interest costs of at least Rs. 7,000 crore.

Benefits of PFMS:

  • Centre stands to save a significant amount on interest costs when the Public Financial Management System is implemented.
  • Facilitates just-in-time releases and monitor the usage of funds including information on its ultimate utilization and payments made only when they are needed.
  • Transformational change: 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.

Conclusion: As part of implementing GST, PFMS is being brought to improve the financial management. It is already universalized to cover all transactions/payments for the Central Sector Schemes.


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