Economy

The government managed to save around ₹10,000 crore of interest cost during 2021-22 (FY22) with the help of a new accounting mechanism that aims to release funds for government schemes ‘just in time’.

·       Finance Secretary TV Somanathan disclosed this on the sideliners of an incident organized to launch Single Nodal Agency (SNA) Dashboard by minister of finance Nirmala Sitharaman.

·       About Rs 4.46-lakh crore undergo the centrally sponsored schemes.

·       The Union government will track cash the money and facilitate in creating governance clear and therefore the money is additionally sent just in time.

·       Below the new system, every State is to spot and designate a SNA for each theme.

·       All funds for that State during an explicit theme are going to be attributable into that checking account, and every one expenses are going to be created by all alternative implementing agencies concerned within the account.

·       It ensures that allocation of funds to States for the CSS are created during a timely manner and when meeting varied stipulations.

·       Stating that ‘just in time’ are the three magic words in fund transfer, the SNA would create payments simple.

·       Trimming expenditure: the system would facilitate slow down on the interest expenditure as cash would be discharged at the stage released its required.

·       If the cash is stuck somewhere, the union government would love to minimise whats stuck and hold it wherever its additional expeditiously control.

·       GoI would like to pay as very little as potential of public cash as interest. The SNA and bureau (Treasury Single Account) facilitate the govt.

·       To minimise the interest prices borne by the govt. which isnt a trivial value. Itll be very useful in containing business deficit.

What is office (Treasury Single Account)?

·       Earlier, after approval, funds were allotted and disbursed to various minis- tries, departments, autonomous bodies and States.

·       This method required to be modified because funds werent being utilized and sitting idle in bank accounts, while the govt.

·       Had to borrow and incur interest. Consequently, TSA was designed.

·       According to an International Monetary Fund (IMF) working Paper, office may be a unified structure of state bank accounts that gives a consolidated read of government money resources.

·       Supported the principle of unity of money and also the unity of treasury, a TSA may be a checking account or a set of connected accounts through that the govt. transacts all its receipts and payments.

·       The principle of unity follows from the interchangeability of all money regardless of its finish use.

·       Whereas its necessary to tell apart individual money transactions for management and news purposes, this purpose is achieved through the accounting system and not by holding/depositing cash in transaction- specific bank accounts.

·       This allows the treasury to de-link management of cash from management at a transaction level.