Centre tightens rules of grant allocation for transparency, efficiency

The Department of Expenditure order vouches for more effective cash management and bring more efficiency in public expenditure management

The government has enforced new rules that will change the operating procedure for Centrally Sponsored Schemes (CSS). The  new rules will tighten the procedure for grant allocation and increase the scrutiny on utilisation of funds disbursed, according to report in the Economic Times .

The Department of Expenditure order, dated March 23, vouches for “more effective cash management and bring more efficiency in public expenditure management”, said the report.

From July 1, 2021, all the state will have to set up a Single Nodal Agency for each Centrally Sponsored Schemes. The states will have to open with an account in a commercial bank to carry out their government business. If reqiued, separate SNAs may be created for sub schemes of an umbrella scheme.

All Union ministries and departments will release the central share for each CSS to a state government’s account held in the RBI for further release to this SNA account.

Then, the state governments will transfer the Central share within 21 days and release its own share within 40 days of the release of the Centre’s share.

CSS had become one of the largest financial outgo for the Centre. Several committees and finance commissions have recommended pruning and rationalisation to increase its effective.

The time lag in release of grants, poor utilisation of funding and parking of funds in states for interest are among the issues red-flagged.