ADB and India sign $50-million loan to boost Bengal’s financial management reforms

• The loan has been granted to West Bengal to improve its PFM procedures and operational efficiencies.

About:

• Public Finance Management (PFM) refers to the set of laws, rules, systems and processes used by sovereign nations (and sub-national governments), to mobilise revenue, allocate
public funds, undertake public spending, account for funds and audit results.

• Public finance reforms include fiscal reforms, regulatory reforms, Expenditure Management, Public Debt Management, Process Improvement, Management Information System, Capacity Development, Institutional Strengthening etc.

Objective of PFM:

• Aggregate levels of tax collection and public spending are consistent with targets for the fiscal deficit.

• Public resources are allocated to agreed strategic priorities.

• Operational efficiency is achieved, in the sense of achieving maximum value for money in the delivery of services.

Significance of PFM:

• It will help generate fiscal savings that could help the state augment growth-enhancing development financing.

• Helps to deliver services more effectively and equitably and regulate markets more efficiently and fairly.

• Help prevent corruption and foster aid effectiveness.

• Also, World Bank is supporting Chhattisgarh for its PFM reforms with the support of a $25.2m loan.

———————————————

Mains Paper 3: Economy

Prelims level: Public Finance Management

Mains level: Objectives and significance of the Public Finance Management

Subscribe to Get Weekly updates

Get daily current affair video, detailed current affairs PPT for quick revision and Free One Liner PDF directly in your inbox. Subscribe now to get this month's one liner for FREE.