Government to Harness Digital India Databases for Enhanced Data Governance, Says Sitharaman

Finance Minister Outlines Strategy to Improve Data Collection and Fiscal Transparency

Finance Minister Nirmala Sitharaman announced the government’s plan to leverage sectoral databases established under the Digital India Mission to enhance data collection, processing, and governance. Speaking at the 49th Civil Accounts Day celebrations in New Delhi on March 1, she emphasized the potential role of the Controller General of Accounts (CGA) in utilizing these vast datasets managed by the Public Financial Management System (PFMS).

“For improving data governance, collection, processing, and management of data and statistics, different sectoral databases under the Digital India Mission will be used alongside advanced technology tools. CGA has the potential to play a key role in this initiative, given that PFMS holds a massive dataset with significant promise for the country,” Sitharaman said.

The move underscores the government’s broader push for improved fiscal transparency and efficient fund management, ensuring real-time data accessibility for policy formulation and public financial management.

Simplifying Annual Accounts for Public Access

In an effort to make financial data more transparent and accessible, Sitharaman urged the Department of Expenditure to work with the CGA to simplify annual accounts, making them more user-friendly and easy for citizens to analyze.

“I would like the Department of Expenditure to explore, in consultation with the CGA, how we can make annual accounts more accessible and allow citizens to analyze them with simpler reports,” she said.

The emphasis on simplification of financial reports aligns with the government’s ongoing efforts to promote transparency and citizen participation in public finance monitoring.

PFMS: Transforming Fund Management and Driving Cost Savings

Sitharaman highlighted the impact of PFMS in improving financial tracking, fund utilization, and expenditure optimization. The system has played a critical role in reducing unnecessary borrowing, enhancing fiscal discipline, and ensuring better financial accountability.

Some key savings and efficiencies achieved through PFMS include:

1. Treasury Single Account (TSA) Savings

• The TSA system, implemented in public autonomous bodies, has saved ₹15,000 crore in interest costs since 2017-18.
• This system consolidates multiple government accounts, preventing idle fund parking and improving cash flow management.

2. Single Nodal Agency (SNA) Savings

• The SNA system, which ensures just-in-time fund release to states, has resulted in ₹11,000 crore in savings since 2021-22.
• This reform minimizes unnecessary fund accumulation at the state level and improves fiscal efficiency.

3. Cooperative Federalism and Financial Inclusion

• PFMS enables unified payments across 31 state treasuries and 40 lakh program implementing agencies.
• It facilitates Direct Benefit Transfers (DBT) across 1,200 central and state government schemes, benefiting over 60 crore citizens.
• Out of these schemes, 1,100 are DBT-enabled, ensuring efficient, transparent, and targeted welfare delivery.

“The taxpayers’ money must be spent judiciously. Efficient tracking of funds helps reduce advance borrowing, and accounting has seen a remarkable transformation in managing inflation and welfare schemes,” Sitharaman stated.

PFMS 2.0: Strengthening Financial Accountability

Building on the success of PFMS, Expenditure Secretary Manoj Govil announced the development of PFMS 2.0, aimed at enhancing the system’s efficiency and automation capabilities.

Highlights of PFMS 2.0

• Automating annual accounts to provide real-time financial data for policymaking.
• Eliminating undue payment delays, ensuring timely fund disbursement and cash flow optimization.
• Enhancing coordination between the Centre and states by harmonizing accounting codes and practices.
• Integrating rural and urban local body accounts, a priority under review by the Finance Commission.

Govil emphasized the need for harmonization between state and central accounts, pointing out that state and central accounts are not yet fully matched.

“PFMS has significantly reduced the idle parking of funds. A lot of government money that was previously kept in banks is now consolidated in the Reserve Bank of India under the Centre’s own account,” he noted.

The Road Ahead: Strengthening Public Financial Management

The government’s data-driven approach to public financial management, backed by Digital India databases and PFMS reforms, is set to streamline expenditure tracking, enhance transparency, and optimize fund utilization.

Highlights from the Finance Minister’s address:
✔ Strengthening data governance using Digital India databases for real-time financial tracking.
✔ Expanding PFMS capabilities to improve fund management, reduce borrowing, and prevent fund misallocation.
✔ Making financial reports more citizen-friendly, enabling greater public participation in fiscal oversight.
✔ Developing PFMS 2.0, integrating state and central financial systems for better fund flow monitoring.

As PFMS continues to evolve, these reforms will play a crucial role in ensuring fiscal prudence, strengthening financial accountability, and promoting effective public spending.