Finance Minister Nirmala Sitharaman said the government has managed to save over ₹25,000 crore through a new accounting mechanism. She said that a pilot has been commissioned for a ‘just in time’ fund release which will help in the optimal utilisation of resources.
In order to ensure the effective utilisation of resources and release of fund just in time, the centre has adopted new mechanisms including Single Nodal Agency (SNA) and Treasury Single Account (TSA). SNA is related to funds for Centrally Sponsored Schemes (CSS), where part of the allocation is provided by the centre and part by States. TSA is for the fund being released to autonomous bodies and implementing agencies (IA) on a regular time interval.
In a social media post, Sitharaman said Union government administered 108 Centrally Sponsored Schemes (CSSs) through State and UT governments, with a budget of approximately ₹5.01 lakh crores for FY24-25 and ₹4.76 lakh crores for FY23-24.
SNA model
Under the SNA model, each State has to identify and designate an agency for every CSS. State governments are required to transfer the CSS funds received from the Centre and their corresponding share within a stipulated period to the single nodal bank account opened in a scheduled commercial bank.
“The Single Nodal Agency then creates virtual spending limits for the down-the-line agencies to incur expenditures against the particular scheme, such as MGNREGA, PMAY, etc. The money remains in the single nodal account, with only limits assigned. Money in a single nodal bank account also earns interest. Interest accrued in SNA bank accounts has resulted in savings of approximately ₹10,592 crores from 2021-22 to date,” she said.
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All funds for that State in a particular scheme will be credited into that bank account and all expenses will be made by all other implementing agencies involved in the account. It ensures that allocation of funds to States for the CSS are made in a timely manner and after meeting various stipulations. Stating that ‘just in time’ are the three magic words in fund transfer
TSA model
According to Sitharaman, TSA has covered over 3000 Implementing agencies and a total of around ₹5 lakh crores of Union Budget till FY23-24. It is important to mention that even large agencies such as ICMR, UGC, BSNL, NHAI etc, are receiving funds from the government through TSA. “TSA has resulted in savings of more than ₹15,000 crores to date,” she said.
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Earlier, after approval, funds were allocated and disbursed to various ministries, departments, autonomous bodies and States. This system is needed to be changed because funds were not being utilised and sitting idle in bank accounts, while government has to borrow and incur interest. Accordingly, TSA was designed.
According to an International Monetary Fund (IMF) Working Paper, TSA is a unified structure of government bank accounts that gives a consolidated view of government cash resources. Based on the principle of unity of cash and the unity of treasury, a TSA is a bank account or a set of linked accounts through which the government transacts all its receipts and payments. The principle of unity follows from the fungibility of all cash irrespective of its end use.