Public Financial Management System: A Comprehensive System for Payment, Effective Use of Funds, Accounting and Monitoring[1]
INTRODUCTION:
Public Financial Management in Government of India (GoI) has been complex due to different types of organisations, plethora of schemes, varied control mechanism specific to processes, scheme type specific fund disbursement processes, multi layer movement of funds (Centre-Sub-national-Local Bodies), need for monitoring, huge receipt base, complex tax structure, different receipt collection processes specific to taxes and non-taxes etc. It is evolving and getting more and more organised with every passing year. GoI collects major revenues in the form of direct and indirect taxes. There are portals to handle income tax and other direct taxes and indirect tax which is mainly Goods and Services Tax (GST). Receipts are remitted to GoI account maintained with Reserve Bank of India (RBI). Other miscellaneous receipts are called non-tax receipts and these are collected by respective ministries and remitted through respective banks to RBI.
Part of tax receipts are retained by GoI for its own expenses and for the schemes it runs across the country as its direct intervention in development. Rest of the receipts are shared with States(sub-national governments) as per the method and formula suggested by Finance Commissions of India after its due approval by the Government. GoI mainly incurs expenditure on Central Sector (CS) schemes, Centrally Sponsored Scheme (CSS), defence, internal security, repayment of debt and interests etc. CS schemes are schemes of gov of India where entire funding is done by GoI, whereas CSS are schemes with some contribution from the states also. There are subsidies paid to support procurement of food grains and public distribution of the same, Kisan Samman, fertilizer etc through one scheme or the other which are by and large funded by GoI. Schemes like MGNREGA, PMAY, Swatch Bharat mission etc are examples of CSS which are partly funded by the States.
Fund disbursement to States for their share as per finance commission and for schemes are done through RBI. Payments to implementing agencies, vendors, employees etc are released by the department through its accredited bank. Every department of GoI maintains its account with one accredited bank which acts as agent of RBI. They release funds as per the advise of the department and seek reimbursement from RBI. Direct benefit transfers are done either directly from the GoI accounts maintained with different banks or through state treasury and banking channel thereafter. In the scheme like MGNREGA, wage payments are released by GoI from its accounts to one state nodal account and from there to the beneficiaries without routing any funds through the state treasury.
For the CS and CSS schemes, utilisation certificates are demanded from the States against the releases made in the previous years before subsequent releases are made. Implementation of schemes are mainly done by the States where it is extensively monitored by the concerned department and through its internal control mechanism. In addition, GoI department concerned also monitors the progress and implementation of the schemes and programs. There are internal audit and external audit provisions for better financial management of the schemes. Before the introduction of Public Financial Management System (PFMS), these activities of release of payment, monitoring and seeking inputs on utilisation of funds were done through different methods including manual and partly computerised stand-alone systems. There were cash management challenges, increased cost of funding schemes and problem in getting cohesive inputs on utilisation of funds. All this was causing problem in formulating the schemes and carrying out subsequent interventions as well as monitoring of the on-going schemes.
PFMS, an IT Portal was started with limited objective of monitoring plan schemes but later it was introduced as a tool to monitor almost all areas of public financial management. It is still evolving and many features are getting added to develop it into Government Integrated Financial Management and Information System (GIFMIS) for entire GoI.
PROBLEMS IN PUBLIC FINANCIAL MANAGEMENT:
There were several challenges in implementation of schemes starting with duplication of objectives and their deliverables and lack of synergy therein. Disbursement of funds to implementing agencies was also happening with involvement of many intermediaries and there was significant opaqueness in the transactions. Funds were lying idle in many cases. Some implementing agencies were sitting with huge funds whereas others were deprived of funds, hence overall scheme implementation was getting affected adversely. Further, there was no centralised database on implementing agencies, their demographic details and indication on their past performance.
Utilisation of funds was assessed on the basis of manual data submitted by the implementing agencies which was often not consistent and audited data used to raise several concerns. Manual collation of data and decision taken on the basis of the same for continuance of the scheme or further releases to be made was also a challenge. Due to non-availability of reliable data, accountability was also spread very thinly. Baseline and development indicators were also very difficult to monitor. Problems in the public financial management were affectingcash management of government as funds are borrowed at premium whereas it was not getting utilised as envisaged.
GENESIS AND OBJECTIVES OF PUBLIC FINANCIAL MANAGEMENT SYSTEM (PFMS)
Genesis: In order to come up with solution to some of the problems related to plan schemes PFMS initially started as a Plan scheme named Central Plan Scheme Monitoring System (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.It was conceived as a tool to monitor central plan schemes of GoI with the name- Central Plan Scheme Monitoring System- CPSMS and it was put in place in 2009. Now in its current avatar, PFMSis an Information Technology (IT) system of GoI to handle public financial management. It is administered by O/o Controller General of Accounts, Ministry of Finance for the purpose of various Public Finance Management related activities. After the initial phase of establishing a network across Ministries / Departments, it was decided to undertake national rollout of 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. In December, 2013 the Union Cabinet approved the national roll out of PFMS for all States and schemes.
Its utility was appreciated quite widely by erstwhile Planning Commission of India and other departments which resulted in demand for its expansion. In 2014, other functions of Payment and accounting were also added to the system thereby making it a broader IT enabled Public Finance Management platform.
Objectives: It started as a project to provide a financial management platform for all schemes, a database of all recipient agencies, and 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 the schemes of the Government. It also aimed to provide information across all 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. Further, PFMS was expected to provide 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. The roll-out will also result in improved programme administration and management, reduction of float in the system, direct payment to beneficiaries and greater transparency and accountability in the use of public funds. PFMS will be an important tool for improving governance. All this would lead to digitization of Government Accounts.
It is aimed to provide IT platform for Treasury operations and track the funds released from GoI to states and other Implementing agencies and also ensure that the money is not parked in the banks for a longer period of time than essentially required. It also provides information to facilitate release of funds to the ultimate beneficiaries through last mile payment connectivity. For any IT tool, speed and timely action is the key to the process. PFMS has been championed as a system to facilitate Just in Time (JiT) releases for more effective cash management whereby the Ministries and departments of GoI should release further instalments of funds to States/sub-national governments and implementing agencies only after seeing the details of fund parked in the treasury and bank accounts of theImplementing agencies or their intermediaries.
BENEFITS OF PFMS
PFMS has facilitated tracking of funds, bringing down the idle funds in the pipeline and improved reporting of utilization of funds released through it. PFMS has given the ammunition in the hands of the managers to track funds at all levels which are involved in the implementation of the schemes. Complete tracking of funds up to the end beneficiary is one of the major objectives of PFMS. The tracking of the funds released from GoI is done through;
- Release of funds under CS and CSSs through PFMS (onboarding a CS/CSS),
- Registration of all Implementing Agencies with PFMS,
- Monitoring of bank balances of Implementing agencies,
- Uploading of expenditure details by IAs by using Expenditure Advance and Transfer module of PFMS.
Report on utilization of funds is another area where PFMS has offered significant help. Through monitoring of funds at implementing agency level and having access to balances in their accounts, PFMS helps in bringing down the idle funds parked with the agencies. Reconciliation, accounting and assessing the efficacy of the schemes through data provided by PFMS has become very handy.
Tracking of Funds: To ensure complete tracking of funds, it is essential that all schemes are registered and duly mapped in PFMS. This process is called On-boarding of scheme on PFMS. It implies that all payments under that scheme are released through PFMS and the tracking of the funds till the last mile is achieved. Registration of all Program Implementing Agencies is done in PFMS and their mapping is done as per the hierarchy of the line of command or fund flow envisaged in the scheme. All components of schemes which are to be monitored are also mapped in the system so that fund flow against those activities is tracked through PFMS. Bank details of agencies managing schemes are also mapped in PFMS. PFMS is therefore able to see the bank balances of the agency mapped for concerned schemes. Then comes the beneficiary or vendor who is getting funds under the schemes or from the government during the conduct of its normal activities. Their registration is also required so that data pertaining to fund flow to specific beneficiary or vendor is carried out through PFMS and tracked as well. These vendors are also registered under specific Program Implementing Agencies. Agencies are also required to upload the expenditure details in PFMS. Thus, not only bank balances are available in PFMS, it is the detail of all Expenditure, Advances and Transfers (EAT) from agency accounts are captured in PFMS. Expenditure is the actual utilization of fund by making payment to the vendors or beneficiaries. Advance is given to a vendor or an employee for supplying goods and services and is later adjusted by a settlement bill. Advance once settled becomes part of expenditure. Transfer means given fund to a lower-level agency by its parent agency for implementing the scheme at that level and do not involve actual expenditure. EAT module is a functionality developed in the PFMS which provide facility to Implementing agencies to upload their expenditure details made out of the GoI releases received. In all cases where the agencies do not have a separate system for processing their expenditure, they should ideally use PFMS for filing their expenditure in EAT module and authorize payment using the online payment authorization system in PFMS. Where IAs have their own systems, they should create an interface with PFMS for capturing their expenditure details in PFMS.
Utilization of releases made by the Centre: PFMS through EAT module and other reports facilitates reporting of utilization of funds processed through PFMS. Through EAT module a functionality available to Ministries/Departments to track the actual utilization of the released under Central Sector (CS) Schemes. EAT module is found to be very useful as it paves way to :
a) To monitor the utilization of fund at all levels of implementation on a real time basis.
b) To enable just in time release of funds to all IAs by monitoring the availability of funds at all levels
c) Bring transparency in reporting of expenditure by IAs
d) Helps in MIS and DIS by scheme managers.
e) Better cash management
f) Ensure timely and efficient payment to vendors and beneficiaries by validating the bank details before actual payment.
Use of EAT module by all IAs would result into more effective monitoring of the fund flow from GoI to the last mile, better cash management, and optimum utilization of resources of the Government.
Reduction in Idling of Funds: Idling of funds has been a known problem in GoI and PFMS is contributing a lot in doing away with idling of funds lying with the intermediary agencies. This is possible only when fund requirement is captured and funds are released in time giving comfort to the implementing agencies that funds would be available when needed and there is no great advantage in parking idle funds in the bank accounts. When it is done in a manner that funds are kept idle for least possible time, government will achieve use of fund at least cost. This Just in Time method of transfer of funds to implementing agencies and tracking of its utility is a complete package to ensure efficient use of funds.
Better Accounting and Reconciliation: Apart from payment and tracking of funds, PFMS is also handling receipt, accounting and the bank reconciliation system for the Central Government. The payments include payments to suppliers, vendors, employees, autonomous bodies, corporations, Direct Benefit Transfer (DBT) payments by Ministries / Departments and transfers to and repayments by State Governments. PFMS carries out Fund Transfer Order (FTO) reconciliation with external system, FTO reconciliation with banks, response reconciliation with banks, failure reconciliation, scroll reconciliation, updating Deemed Success/ Failure status received from NPCI, development of new protocols and functionalities like alert systems, Monitor the Debit pendency, Credit Pendency, Success, resolution of receipt of Non-standard rejection codes from banks, Credit failure with inadmissible reasons, receipt of incorrect IIN in Aadhaar based payment, non-receipt of credit bank details in Aadhaar based payment, Aadhaar based payments in wrong bank accounts, delays and non-validation of bank accounts by banks/India Post, false response from bank, delayed response from banks results in delayed communication to the external systems.
Synergy in payments and schemes: Since the payments, receipts and accounting are critical for better scheme implementation and healthy financial management, PFMS provides it in a very comprehensive manner. This has resulted in faster synergy in process flow development and business process re-engineering for bringing in faster reforms in the government’s processes. Quick implementation of Treasury Single Account (TSA) in the identified Autonomous bodies to facilitate Just-in-Time payments is an example of this improved synergy. PFMS as a platform facilitates making ‘Just in Time’ payment’. Department of Expenditure, Ministry of Finance has issued instructions to all Ministries/ Departments to ensure JiT release of funds using data available in PFMs on the utilization of funds by the agencies.
Other Benefits of PFMS
· Improved Programme administration and management
· Decision Support System for all levels of program managers.
· State Govt. receives details of funds devolved from GoI immediately.
· Copies of sanction orders will be available in PDF for the users of the States and agencies.
· As the data will be available in xml format, the same could be consumed by the States and implementing agencies in their system for reporting purposes.
· The information on releases can be used to communicate to the respective departments in the State for further release.
· The utilization can be monitored by State Departments for the Schemes where Funds received from GoI is further transferred to Implementing Agencies (IAs) such as State Health/ Education Societies using PFMS –CBS Interface.
· Direct e-payment to beneficiaries
· Validation of Bank Accounts of Beneficiaries
· Reducing failed transactions
· Removal of ghost beneficiaries of social sector schemes
· Online Status of Success and Failure from Banks
· Capturing component wise expenditure – on real time basis.
· On line information of bank balances to facilitate JiT provision of funds to implementing agencies.
· Dissemination of relevant information to citizens.
PFMS PLATFORM, DESIGN, MANAGEMENT AND EVOLUTION
Architecture and Modules: Since its inception, PFMS is based on SQL platform and DotNet language. NIC is technology partner for PFMS and advices O/o CGA on technical matters. PFMS base architecture was designed in 2009 for the purpose of fund flow tracking for planned schemes (as Central Planned Scheme Management System-CPSMS). As brought out above, mandate for PFMS was enhanced over the time by adding more features and modules:-
a) Direct beneficiary Transfer (DBT) schemes were on-boarded in 2014
b) Pay and Accounts Office (PAO) Module was on-boarded in 2015
c) State Govt. treasury interface with PFMS was started in 2016
d) PFMS use was made mandatory to all CS scheme Project Implementation Agencies in 2017.
Design Review and Hardware: In order to cater to enhanced mandate, additional compute requirement was added in incremental manner. Further after a decade of utilizing current architecture and based on experience gained, PFMS it continuously reviewing & re-designing its architecture. To provide strategic & Technological advisory for digital transformation journey of PFMS, world class consultants with experience in government project of similar scale & complexity have been proposed. PFMS hardware and architecture is very modest for the kind of work is doing and further expected to perform. In order to meet the growing requirement of MGNREGA scheme, separate servers were put in place. Similarly, there is requirement and demand for more resources to make PFMS more friendly. Attempts have been made in the past to add hardware as a scalar and linear development effort. As of now, PFMS has its main Data Centre in National Data Centre (NDC) at New Delhi. PFMS also have Disaster recovery center at National Data Centre (NDC), Hyderabad. Both Data centers are being managed by NIC. Present PFMS infrastructure set-up is as follows:
Table 1: PFMS Infrastructure Setup | |||
S. No | Category | Main Data centre, New Delhi | Disaster Recovery Site, Hyderabad |
1 | Physical Servers | 56 (26DB+27 HyperV) | 50(19DB+31HyperV) |
2 | Virtual Machines | 113 | 102 |
3 | Network Switches | 11 | 6 |
4 | SAN Switches | 11 | 6 |
5 | SAN Storage | 1(1PB) | 1 (500TB) |
6 | Load Balancer | 2 | 2 |
7 | Firewall | 2 | 2 |
CURRENT STATUS OF PFMS
PFMS had successfully made payment under 510 DBT schemes of GOI amounting to Rs 2,67,093 Cr till the end of FY 2019-20. Similarly, during the current FY 2020-21, in spite of slowdown due to Covid-19, payment to the tune of Rs.1,62,676 Cr was disbursed through 466 DBT schemes. PFMS has also added two new facilities “know your payments” and “Track NSP” for dissemination of information to citizens on its website. These new facilities were also added on UMANG Portal through API.
In GoI, payments are recommended by Program Implementing Agency and approved by the executive after financial concurrence. Thereafter bill is raised by Drawing and disbursing Officers (DDOs). These DDOs then send the bill for payment to Pay and Accounts Officer (PAO). Some of the DDOs play the hybrid role of acting as DDO and PAO for the limited purpose of releasing the payment. Entire payment verification and accounting as well as reconciliation with banks is done by PAOs. For GoI, Payments for Civil Ministries, there are 741 PAOs on board PFMS, out of which 546 PAOs are making payments and performing other functions directly through PFMS while 195 PAOs including Revenue PAOs of Central Board of Direct Taxes (CBDT) & Central Board of Indirect taxes and Customs (CBIC), Department of Posts, and Atomic Energy are using other systems but are on-boarded on PFMS through integration protocols. About 283 Cheque Drawing DDOs (CDDOs) remain outside the ambit of PFMS as of now. However, almost all CDDOs within India have been added to PFMS and mainly outside CDDOs are pending to be added. This includes 198 CDDOs of Ministry of External Affairs, 14 CDDOs of Ministry of Tourism and 1 CDDO of Ministry of Jal Shakti – all located outside India. PFMS does not cover the specific requirements of payments/ receipts in Foreign Currency, Payments/ Receipts in Foreign Banks and remittances to India. Conceptual design is being finalized in consultation with the Ministries.
Except for the schemes related to Atomic Energy, IB (MHA) and Non-Civil Ministries i.e Railways, Defense, and Post all CS schemes of GoI are onboarded on PFMS. By September 2021 around 593 CS schemes out of total 721 were onboarded. The task of registration of agencies of CS scheme is complete. In fact, the agency registration and use of EAT module has been linked with release of funds by instructions issued by DoE. At present 1,20,964 (one lakh twenty thousand nine hundred sixty-four) agencies are registered under CS schemes. Out of these 21,189 agencies are using EAT module.
Under CSS all schemes are on boarded on PFMS. At present, there are 171 CSS which are being operated through PFMS. Total 19,81,730 Implementing agencies of CSSs are Registered on PFMS. Out of these, 81,690 are using EAT module. The State Project Management Units (SPMUs) of PFMS has been coordinating with all State Governments for roll out of PFMS for all CSSs. Overall, in Civil Ministries/Departments more than 99.5% of total payments are being done through digital mode through PFMS. On receipts side the Non-Tax Receipt Portal (NTRP) has been developed to collect Government receipts through online mode. All Ministries and Departments are gradually coming on board on NTRP. For the year 2019-20 Rs. 1,17,725.41 Crores of Non-Tax Receipts were collected through NTRP against the total budget of Rs. 3,13,179.12 Crores. For Direct Tax receipts, the legacy system of Revenue Accounts Management System (RAMS) is being used for receipt accounting. For the Indirect tax receipts, a Portal ARPIT has been used for reporting Indirect Tax data. ARPIT is integrated with GSTN and PFMS for reporting of the indirect taxes.
Average turn-around time for transfer of funds to the beneficiaries through PFMS: PFMS payment cycle includes Program Division issues sanction - actual fund release by Pay & Account Office (PAO) of the ministry – Funds debited by accredited bank – NPCIL process the transaction – Destination bank credits the bank account of beneficiary- Reverse MIS confirming the payment- Confirmation received at PFMS via NPCIL & Debit bank. In the process various stakeholders Ministry, Banks, NPCIL are involved and total time taken at each stage is now known and monitored.
Table 2: Average Transaction Credit Time (DBT Transactions) -October 2020 | ||||
Time | Transaction request by program Division to Fund Release by PAO | Fund Release by PAO to Debit Completion by accredited bank | Debit Completion by accredited bank to Credit Completion by destination bank | Total Credit Time |
Hours | 3.62 | 104.43 | 10.24 | 118.30 |
Days | 0.15 | 4.35 | 0.43 | 4.93 |
Some of the schemes namely, MGNREGA of Ministry of Rural Development, PM Kisan of Ministry of Agriculture, are using PFMS and doing the just in time transfer of fund to the implementing agencies and the money is transferred to beneficiary’s account immediately. The beneficiaries receive the money without any delay. Consequent upon Government's decision to bring Autonomous Bodies (ABs) under the ambit of Treasury Single Account (TSA), a system for the same through PFMS and RBI has been implemented. Just in Time (JiT) releases to the specific ABs is being ensured through the TSA system wherein funds are being released to the ABs when the payments are actually made by them to the beneficiaries (vendors/ suppliers/ third parties. The system eliminates the float with the ABs to a large extent. At present, 15 ABs have been on-boarded in the TSA system. This will be extended to other ABs once the system stabilizes. In order to rectify this reconciliation, changes in the PFMS DBT configuration is being made map the DBT Mission Scheme code at the activity level instead of PFMS Scheme Level. An API is in place to share the data between PFMS and DBT Bharat portal.
One of the more talked about payment system handled by PFMS is DBT payment. DBT payments are made through PFMS which includes various stakeholders like External Software Systems of the Ministry/Department, Accredited Banks, Sponsor Bank/Agencies banks, NPCI, Destination Bank, RBI etc. PFMS, being the common link across all these stakeholders, performs various activities like FTO reconciliation with external system, FTO reconciliation with banks, response reconciliation with banks,reconciliation of failed transactions, Scroll reconciliation, updating Deemed success or Deemed failure status received from NPCI, development of new protocols and functionalities like alert systems.
DBT Schemes covered by PFMS: So far 510 DBT Schemes have been covered. There are 45 CS scheme, 29 CSS, 257 State Linked Scheme, 45 UT Schemes and 8 other central expenditure. The amount of cash transfer done in these schemes was Rs.267092.98 Cr. The annual growth in term of Amount disbursed based on the data of last seven FY are as under:
Table 3: Annual Growth in fund disbursement through PFMS | ||||
Financial Year | Number of Schemes | Transaction | Amount (in cr) | % Increase (Amt) |
2014-15 | 56 | 2,19,43,733 | 6,967.17 | |
2015-16 | 90 | 6,74,50,640 | 22,138.47 | 217.75% |
2016-17 | 162 | 10,11,48,847 | 31,393.53 | 41.81% |
2017-18 | 297 | 16,54,73,305 | 90,754.95 | 189.09% |
2018-19 | 416 | 50,97,25,682 | 1,54,748.87 | 70.51% |
2019-20 | 510 | 1,02,37,64,443 | 2,67,092.98 | 72.60% |
2020-21 (till Oct 2020) | 466 | 81,96,85,740 | 1,62,676.08 | |
Chart 1: The Annual Growth of DBT payments over 7 years
Estimate of quantum of fund float in current schemes after introduction of PFMS and interest savings on this account: In a standard welfare scheme, funds are transferred from Program Division to Program Implementation Agencies in pre-decided hierarchy (as per operational requirements) (Central Agency- State Program Implementation Agency- District Program Implementation Agency (DRDA)- Block Program Implementation Agency (BDO) – Village Panchayats (VDO)). PFMS have developed detailed mechanism to track the funds from Program division till it reaches to intended use (vendors/beneficiaries/ procurement) for the implementation of Funds. Ministry of Finance/ Line ministries/ Program Divisions/ State governments are actively monitoring PFMS MIS to track the funds and funds are being released based on unspent balances/ float lying unutilized. However, no focused study has been conducted at PFMS on fund float and reduction of interest savings. However, presently PFMS through its detailed MIS provides option to Ministry of Finance/ Program Divisions/ Ministries to continuously monitor Float of funds. Ministries are using the same to reduce the float lying unutilized. Further, more major DBT payments including those for MGNREGA (wage payments) and PM-KISAN have eliminated complete float in the payment process.
Feedback of Banks integrated with PFMS: PFMS has been integrated with more than 500 banks. PFMS is continuously receiving integration requests from the banks and there are over 100 banks in the pipeline for integration. Integration with banks helps PFMS to validate the beneficiaries/ vendors identity before transferring any kind of monitory Support. In addition to it, it offers freedom to Program Implantation Agencies to keep their Bank account with bank of their choice (in any of the integrated bank). There is a streamlined mechanism to take feedback from the integrated banks. There is a separate vertical looking after banking operations of PFMS. Regular Meetings are being held with banks where inputs on Fin-tech, banking innovations, Outreach are received. Based on the inputs PFMS has developed one bank performance monitoring App for Bank Management to check pendency level of their respective bank. This App was received very good response among the bankers. The banks have also appreciated the utilities provided by the PFMS for direct credit from Ministry/ program Divisions, multiple modes for payment, Acknowledgment facility and instant redressal of issues raised by banks. Account validation facility of PFMS has helped banks to reduce the failure rate and improved service delivery towards better financial inclusion.
Linking of PAHAL/DBT with PFMS for comprehensive Management Information System (MIS): The on-boarding process of PAHAL Scheme on PFMS involves various process like Agency registration, DSC enrolment, beneficiaries’ registration after due validation & Payment processing of almost 27 Crores beneficiaries. The date for PAHAL onboarding on PFMS was scheduled till March 2021. However due to covid and non-availability of resources it has got delayed.
Integration of NAREGA Soft, software for MGNREGA and PFMS: PFMS and NREGA-Soft of Ministry of Rural Development is integrated for making payment under MGNREGS. The payments of wages are happening through PFMS and the responses received from the sponsor banks are being shared with NREGA-Soft. Thereare specific reports in PFMS that give details of MNREGA payments. Protocol has been developed in PFMS for the convenience of beneficiaries and scheme managers. Similar protocol is being developed in PFMS for other major schemes. Following protocol has also been established between PFMS and NREGA-Soft to ensure timely payment to beneficiaries.
Table 4: Protocol for seamless data-interchange between PFMS and NREGA-Soft | ||
S. No. | New Protocol | Advantages |
1 | Credit response sharing through SSIS | 1. Eliminate the issue related to loss of XML files in transit through SFTP based process. |
2 | Ack/Nack process for FTOs | Results in near no gap of FTOs between PFMS and external systems |
3 | FTO Tracking and Fund release status sharing through SSIS | 1. Eliminate the issue related to loss of XML files in transit through SFTP based process. |
4 | Automatic pushing of payment files to Banks if Nack received from Bank | Resulted in faster resolution of NAck cases ultimately leading to reduction in delay of payment. |
5 | Automatic re-pushing of payment files to Banks if No Ack received from Bank within 24 hours | Eliminate the issue related to loss of XML files in transit through SFTP based process |
6 | Ack/Nack process for response files shared by Banks | 1. Banks get confirmation that response files have been consumed by PFMS |
7 | Payment Route sharing by Banks with PFMS | PFMS get to know the payment route like APBS/NACH/NEFT etc used by bank for credit of transaction which is further useful for calculation of NPCI/Bank commission for DBT Transactions |
8 | Standardization of Rejection codes | More clear reason for rejection of transaction resulting in clarity to the end user to take the necessary corrective action for re-initiation of transaction |
9 | Web Service between Banks and PFMS for reconciliation of payment files | It will help in timely delivery of payment files to Banks which got lost in transit |
CHALLENGES IN PFMS
It is pertinent to mention that even though the entire processes are automated it is still not complete. There are many intermediary agencies which are not registered or added on a regular basis. Further, there is always a requirement of seeking inputs on different components of the schemes which are not added in the beginning. Such change of mapping is also an on-going process. Monitoring and protocol development is required for making the payments within the timelines, exception handling (failure cases, missing files, deemed success cases etc), hand holding the Agencies and Ministries, co-ordination with various stakeholders on a daily basis etc. All these extensive activities involve various issues (both technical & non-technical). Considering that almost 50 lakh payments, on an average, are being processed through PFMS every day, the activities as mentioned above, require continuous monitoring and resolution of these processes.
Due to the increase in DBT disbursements under various governments’ schemes to farmers, MGNREGA workers, and workers of unorganized sectors, the day-to-day monitoring has become very essential. Moreover, a large number of technical issues like DSC enrollment, file sharing response, system malfunctioning, non-credit of money in the beneficiaries account due to server issues, delay in credit, non-receipt of responses from bank, etc needs to be monitored and resolved on a regular basis. Further, the on-boarding of PAHAL on PFMS is in progress and under this scheme approx. 27 crore beneficiaries are to be paid subsidy on a regular basis and naturally the load on the system and grievances of the beneficiaries is phenomenal.
The technological constraints that PFMS faces in gradually reaching the best practices standards are as below:
a. The PFMS architecture is a decade old, and was developed on Dot Net on the front end and SQL as RDBMS. This design is already under strain due to addition of new utilities, causing performance related issues. There are existing challenges of scalability and performance. Due to this primary reason, the complete digitization of Government Accounts through PFMS as is envisaged has only been partially realized.
b. There is no architectural distinction between core and non-core functionality, and the interactions between them. This has created a situation where several modules use the same PFMS OLTP database tables directly and thereby, causing a bottleneck at the database. This is a non-scalable architecture and hence, unsuitable for GIFMIS.
There are certain challenges with the present Microsoft technology components:
i. It is currently not possible to have multiple active instances of SQL server accessing a shared database with appropriate load distribution. Additionally, SQL servers use shared locks for database table reads which cause major resource contention issues in OLTP systems.
ii. BizTalk allows multiple instances in a cluster but with a dependency on a centralized database. It’s not possible to have a queue-based BizTalk cluster which is a more reliable and scalable option.
WAY FORWARD
PFMS to Government Integrated Financial Management Information System (GIFMIS): PFMS has gradually evolved into a complete solution for all payments, receipts and accounting for Govt. of India. The objective of PFMS is to establish an online Financial Management Information and Decision Support System. GIFMIS is more comprehensive and PFMS may be enhanced to offer all benefits expected from GOFMIS system. Following table compares the PFMS’s functionalities against the generally known/accepted modules (both core and non-core) of GIFMIS.
Table 5: Comparison of accepted modules of GIFMIS and availability on PFMS | ||
Sl. No. | Functionality/Module of GIFMIS | Availability on PFMS |
1. | Fiscal Simulation | No |
1. | Budget Preparation | No |
2. | Budget Management | Partial |
3. | Chart of Accounts | Partial |
4. | Commitments Management | No |
5. | Payments Management | Yes |
6. | Receipts Management | Partial |
7. | Cash Management | No |
8. | Debt/ODA Management | No |
9. | HR Management/Payroll | Partial |
10. | Tax & Revenue Management | Partial |
11. | Procurement Management | No |
12. | Assets/Property Management | No |
13. | Accounting & Reporting | Partial |
14. | Audit and Evaluation | No |
15. | Data Analytics/BI | Partial |
Final development of all modules in line with the requirement of GIFMIS would be contingent upon various factors such as integration with Direct and Indirect Tax Networks, readiness of Autonomous Bodies, infrastructural resources and above all will of the government.
Development of Public Information Portal for grievance redressal: In order to serve citizens of India in transparent & efficient manner, it was envisaged as an online platform to provide information regarding welfare scheme disbursement. It was also decided to provide a dedicated grievance redressal mechanism through the online portal. Accordingly, PFMS public information portal (called JanhitProtal) has been designed & developed. Once launched and made accessible to public, the portal will enable citizens/beneficiaries to know the real time status of their entitlement/DBT payments (through three functionalities, Know Your Payment, Know Your Scholarship and Know Your Account Validation) as well as option to lodge complaint/ feedback. It also includes MIS reports on funds transferred to state governments. Once the portal is launched, feedback from the stakeholders will be received and examined for incorporation. PFMS has been linked to UMANG App to facilitate Know Your Payments as well as for Scholarship Payments through the National Scholarship Portal
Use of Data Analytics, Big Data and Blockchain Technology: Technology has evolved by leaps and bounds in the last decade, and the field is ever changing. New architecture styles, such as microservices and Big Data are able to provide more efficient applications and reporting. In order to have a holistic study on the reduction in Float of Funds post PFMS rollout, Data Analytics may be used to make system more dynamic to bring down the float. In addition to descriptive analysis with reference to reduction of parking of fund, analytics will also help PFMS in predictive & fraud analysis.Blockchain may also help in reducing the role of intermediaries and cutting down the noise introduced by them in the system.
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