Daily Current Affairs Schemes- Policies- Initiatives

Public Financial Management System (PFMS)

Context: The Public Financial Management System (PFMS) is a web-based online software application developed and implemented by the Controller General of Accounts (CGA), Department of Expenditure, Ministry of Finance.

Analysis

    • PFMS started during 2009 with the objective of tracking funds released under all Plan schemes of 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 beginning with Pay & Accounts Offices payments, the O/o CGA did further value addition by bringing in more financial activities of the Government of India in the ambit of PFMS. 
  • The outputs / deliverables for the various modes/functions of PFMS include (but are not limited to):
  • Payment & Exchequer Control
  • Accounting of Receipts (Tax & Non-Tax)
  • Compilation of Accounts and Preparation of Fiscal Reports
  • Integration with Financial Management Systems of States
  • The primary function of PFMS today is to facilitate sound Public Financial Management System for Government of India 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 Government of India.
  • PFMS has established interface with the treasury systems of all the States and the Union Territories with Legislatures. 
  • This facilitates exchange of data regarding budget, allocation and expenditure against the central transfer of funds for Centrally Sponsored Schemes of the Government of India.
  • As the backbone of the payment system of the Government of India, PFMS is integrated with the Core Banking system in the Country, and hence, has the unique capability to first validate the account before pushing online payments to almost every beneficiary/vendor. 
  • Interface with the National Payments Corporation of India (NPCI) has also been developed that facilitates validation for Aadhaar-linked payments.
  • PFMS is also the channel for payment, accounting and reporting under Direct Benefit Transfer. 
  • As such, every Department/Ministry of Government of India transfers funds electronically to beneficiary (individual or institution) through PFMS. 
  • Further, State Governments and the Implementing Agencies transfer the cash components to beneficiaries through PFMS. 
  • To facilitate the above, PFMS has interface with over fifty Beneficiary management applications/systems of different Ministries and Departments, such as PM-KISAN, NSAP, MNREGASoft, MCTS, AwasSoft and Kanyashree.

Mandate

  • The mandate given to PFMS by Cabinet decision is to provide:
  • A financial management platform for all plan schemes, a database of all recipient agencies, integration with core banking solution 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 scheme of the Government.
  • To provide information across all plan schemes/ implementation agencies in the country on fund utilization leading to better monitoring, review and decision support system to enhance public accountability in the implementation of plan schemes.
  • To result in effectiveness and economy in Public Finance Management through better cash management for Government transparency in public expenditure and real-time information on resource availability and utilization across schemes. 

Enhanced Mandate of Ministry of Finance

  • Ministry of Finance, Dept. of Expenditure in 2014 directed CGA to proceed with Digitization of Govt. Accounts through PFMS.

 

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