Page 50 - Banking Finance March 2022

FEATURE

MONEY FOR 100% CENTRAL SCHEMES

LIKELY TO GO DIRECTLY TO

BENEFICIARIES FROM APRIL

T he Centre plans to directly transfer 100% New guidelines for all central sector schemes with an annual

outlay of over Rs 500 crore will be implemented through
centrally funded schemes of Rs 500 crore or
the Treasury Single Account (TSA) model so that funds for
more, such as Bharatnet, Namami Gange-
National Ganga Plan, metro projects, LPG
of India to beneficiaries and vendors.
connection to poor households, crop insurance, labour schemes are released in time from the Consolidated Fund
welfare schemes etc., from April 1, dropping state mediaries
to ensure better compliance. Each ministry will designate an autonomous body as the
Central Nodal Agency (CNA) for the purpose. It will open an
At present, funds for schemes are drawn by the concerned account with RBI, which will be mapped on to the TSA and
ministry from the RBI and transferred to the state treasury. public financial management system models. The RBI will
It then moves to the state commissioner in charge and to become the primary blanket to ministries without
state implementation agencies, which transfer funds to the involvement of any agency bank. These will become
field level at district or sub-division level. From here, the 'assignment accounts' to directly disburse funds after
money is finally disbursed to intended beneficiaries or necessary checks.
vendors.
In case of schemes with an outlay of less than Rs 500 crore,
The new setup meant to reduce intermediaries and levels state government agencies may be engaged in
and cut administrative bottlenecks is expected to see implementation. However, the concerned central ministry
disbursal of funds directly from the Consolidated Fund of will again designate a central nodal agency for
India to the beneficiary/implementing agency so that implementation, which will open a central nodal account in
implementation of schemes would be in sync with fund flow. a scheduled commercial bank.
Various studies have indicated that funds are held up or
parked too often at various levels. In other cases, they never Implementing agencies down the ladder will be designated
make it past the state treasury. As a result, CSS work as sub agencies which will use the CNA account with clearly
implementation is often heavily delayed after money has defined drawing limits. Ministries will release funds to the
been released by the Centre. The new guidelines are aimed CNA account strictly based on requirement and keeping in
at cutting down disbursement time and ensuring fund access mind balance funds available as per PFMS.
'just in time'.
The fund release will be 'just in time' as far as possible - not
The finance ministry is learnt to have alerted all central more than 25% of the annual amount earmarked for the
ministries and departments and sought their opinion on the scheme will be released at a time and additional funds will
new format expected to come into effect from April 1. A be released only upon utilisation of at least 75% of the funds
similar tightening of process was introduced last year for released earlier. All unspent money is to be returned to the
schemes jointly funded by Centre and states. CNA account. (Source: The Economic Times)

50 | 2022 | MARCH | BANKING FINANCE