What is PFMS? Mandatory Use of Public Finance Management System for Central Sector (Important) (Download PDF)

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Government has made use of Public Finance Management System (PFMS) for all Central Sector Schemes mandatory. PFMS ensures that the benefits of the various Government Schemes reach to the last mile.

Image of Public Finance Management System

Image of Public Finance Management System

Image of Public Finance Management System

What is PFMS?

  • PFMS Scheme was rolled-out by the Controller General of Accounts (CGA) at the behest of Finance Ministry, Department of Expenditure as a Public Finance Management (PFM) reform.

  • The Public Financial Management System (PFMS) was earlier known as Central Plan Schemes Monitoring System (CPSMS)

  • Started during 2009 as a Central Sector Scheme of Planning Commission for tracking funds released under all Plan schemes of GoI.

  • In 2013 the scope was enlarged to cover direct payment to beneficiaries under both Plan and non-Plan Schemes.

  • In 2014, digitization of accounts was achieved through PFMS and the additional functionalities would be built into PFMS in different stages.

  • Beginning with Pay & Accounts Offices payments, the CGA brought more financial activities in the ambit of the project.

  • Web-based online software application developed and implemented by the Office of Controller General of Accounts (CGA).

Objectives and Functions of PFMS

  • Facilitates sound public financial management system for Government by establishing efficient fund flow system as well as a payment cum accounting network.

  • Provides various stakeholders with a real time, reliable and meaningful management information system and an effective decision support system, as part of the Digital India initiative of GoI

  • Also supports reports real time expenditure at all levels of programme implementation.

  • Now, the enhanced application caters to all Plan and Non Plan payments, all tax and non-tax receipts and functions such as a comprehensive HRMIS and self-contained pension as well as GPF modules.

  • The ambit of PFMS coverage includes Central Sector and Centrally Sponsored Schemes as well as other expenditures including the Finance Commission Grants.

  • In future, all existing standalone systems currently catering to various functions in Government will be subsumed in PFMS.

Current Scope of PFMS

  • Tracks all the funds of all Central Sector Schemes with a budgetary outlay of Rs. 6, 66, 644 crore covering over 31 percent of the total Central Government expenditure during the current financial year 2017 - 18.

  • More than 300 Central and State Government Schemes are now riding on PFMS and payment of more than Rs. 2.91 lakh crore relating to various Schemes under DBT has been made through PFMS since 2013.

  • Payments to 34.19 crore beneficiaries have been made through PFMS and there are 21.72 lakh Programme Implementing Agencies registered on PFMS

    Strengths of PFMS

    • Biggest strength of PFMS is its integration with the core banking system- provides PFMS with unique capability to push online payments to almost every beneficiary and vendor.

    • PFMS has Core Banking System (CBS) interface to all Public Sector Banks, Regional Rural Banks, major private sector banks, Reserve Bank of India, India post and Cooperative Banks.

    Benefits of PFMS

  • Promotes transparency tangible improvements in the overall Central Government Financial Management and implementation of various Central Government Schemes.

  • Takes care of diversity and multiplicity of channels through which money is spent and transferred (including through Direct Benefit Transfer)

  • Establishes a common electronic platform for complete tracking of fund flows from the Central Government to large number of programme implementing agencies, under both Central Government and the State Governments until it reaches the final intended beneficiaries.

  • Enables real time monitoring of disbursements and utilization of funds

  • Provides decision support system across ministries and departments and all state and UTs.

  • Improvements brought-out in the management of public funds through PFMS cascade beneficial impact on the management of State Government Public Finances as well as efficient delivery of Public Services by the States.

  • Reflects true spirit of co-operative federalism with the centre and the state governments combining their efforts.

  • Provides potential to improve programme and financial management thus reducing the float in the financial systems by enabling ‘just in time’ releases.

  • Provides information on Government borrowings with direct impact on interest costs to the Government.

  • Use of PFMS cuts the paper work

  • Tracks any unnecessary parking of funds by the implementing agencies minimizing the delay and pending payments.

  • PFMS enabled the Government in ground breaking Direct Benefit Transfers (DBT) with collateral benefits of plugging leakages and eliminating ghost beneficiaries.

From PFMS to Government Wide Integrated Financial Management System (GIFMIS)

Considering the massive preparatory work required for achieving full PFMS implementation including software and hardware up-gradation, fulfilling training needs at every level of the Government and enabling smooth on-boarding by the State and UT Governments, Central Government decided in favour of a phased and calibrated roll-out for smooth implementation

  • 13 Central Sector Schemes are now under PFMS- achieve mandatory PFMS on boarding for the remaining Schemes and Programmes including the Centrally Sponsored Schemes numbering 613 across all civil ministries and departments.

  • Ultimately make PFMS government wide integrated financial management system called GISMIS - comprehensive payment, receipt and accounting system.

- Published/Last Modified on: December 4, 2017

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