|Introduction: Write a brief introduction about Public Financial Management System|
Body: Write down the benefits of Public Financial Management System in terms of resource allocation and implementation of policies.
Conclusion: Provide some suggestions for improving PMFS
Public Financial Management System (PFMS) is a web-based online software application for real time monitoring of utilization of funds across Government. It is developed and implemented by the Controller General of Accounts (CGA), Department of Expenditure, Ministry of Finance.
Importance of PFMS
- It facilitates sound and efficient fund flow system as well as a payment cum accounting network. It brings transparency in real-time information on resource availability and utilization across schemes, as part of the Digital India initiative of GoI.
- PFMS provides real time, reliable and meaningful management information system and an effective decision support system.
- The PFMS makes every agency using public money to route it through bank accounts. Since banks report to the RBI in real time, any fiscal stress now becomes apparent immediately.
- It is a financial management platform for all plan schemes, a database of all recipient agencies. It integrates with core banking solution of banks handling plan funds, and performs efficient and effective tracking of fund flow to the lowest level of implementation for plan scheme of the government.
- PFMS has evolved as an end to end solution and has a unique capability to pre-validate the account details before pushing the transactions. PFMS can be credited to the transformation of Direct Beneficiary Transfers space in financial governance in India.
- PFMS has empowered governance to become more responsive, accountable and transparent in regular activities of CGA, such as payments, receipts, accounting, expenditure control, management of provident fund and pensions etc.
- PFMS is helpful in tracking of flow of funds to the last beneficiary or implementation level.
- PFMS is helping in achieving E-governance and as well as digital financial inclusion objective of the Govt.
However, There are some areas, where improvements are required with respect to PMFS:
- PFMS will have to integrate all Govt. accounts and adding all states, agencies, vendors etc. under its ambit to ensure significant coverage.
- PFMS will have to add significant data management capabilities in-order to ensure better monitoring/review to deliver on the idea of a decision support system for effective cash management.
- PFMS need to constantly upgrade to adoption of rapid changes in technology.
- PFMS need to integrate with the banking systems to ensure faster coverage/integration of all the Govt. entities.
The PFMS has revolutionized the ways public finances are managed in the country. With constant improvement and increasing coverage, the scope of PFMS is ever-increasing. Going ahead, PFMS will not only be seen as a tool for managing planned expenditure but will also add new meanings to Direct Beneficiary transfers, data driven cash management and e-Governance in India.