Annual savings of Rs 10k cr in interest cost for Centre, says finance secy
With just-in-time release of central funds saving the exchequer annually over Rs 10,000 crore in interest cost, finance minister Nirmala Sitharaman on Tuesday said a Single Nodal Agency (SNA) dashboard, that tracks funds till the end-user, will realise better value for every rupee spent by the Centre.
Launching the SNA dashboard on Tuesday as part of the Azadi ka Amrit Mahotsav iconic week celebrations, Sitharaman said just-in-time has infused fresh energy in public finance management.
“About Rs 4.46 trillion go through the centrally-sponsored schemes and this is not a small amount. Today you are in a position to track that money …That quantum of money is also equally sent just in time… What a better value realisation for every rupee sent,” Sitharaman said. SNA was implemented from July 1, 2021.
The SNA model requires states to notify a SNA for each centrally-sponsored schemes. Under the SNA model, funds are released by central ministries to state governments’ accounts in RBI. Subsequent instalment to the state can be released only after transfer of earlier central releases from the state treasury to SNA and utilisation of 75% of the central share and state share. As on June 8, 2022, SNAs had Rs 1.2 trillion in their accounts and fresh releases by the Centre will be made utilisation of these floating funds.
From August 1, 2020, autonomous bodies and other central implementing agencies have also been mandated to open Treasury Single Account (TSA) with the Reserve Bank of India for meeting their actual expenditure requirements on a real-time basis. TSA ensures just-in-time releases to ABs to pay vendors and suppliers, bypassing the earlier system of transferring their annual budget allocations in tranches to respective AB’s bank accounts.
The move has cut down fresh floating funds with these bodies as funds will now remain parked with the Consolidated Fund of India until actual expenditure. The Centre spends about Rs 11.8 trillion /annum on central sector schemes.
Finance secretary TV Somanathan said reduction fund floats in both centrally-sponsored and central sector schemes are saving over Rs 10,000 crore/annum in interest cost to the government as borrowings are done just ahead of actual expenditure requirement.
“So, the SNA and TSA (Treasury Single Account) help us to minimise the interest costs borne by the Centre and that is not a trivial cost. That is actually helps us a lot, particularly in a difficult year like current financial year. These are extremely helpful in containing fiscal deficit within what is possible,” Somanathan said.