Centre tightens rules of grants, ropes in RBI for disbursal of funds to states

• Centre has tightened the procedure for grant of central funds under Centrally Sponsored Scheme (CSS) through new rules.

About new rules:

• Each state will be required to set up a Single Nodal Agency (SNA) for each CSS.

• Centre will release the funds to the state’s account which should be transferred to concerned SNA’s account within 21days.
• State should also release its own share within 40 days of the release of the Centre’s share.

• Phased and conditional funding from the centre-

• No more than 25% of total central funding in beginning of financial year.

• Further funding on the condition that state government has transferred and ensured utilisation of 75% of the total released funding.

• All interest earned from the funds should be mandatorily remitted to the respective Consolidated Fund of India.

• All SNAs and lAs will get mapped to the centrally-run Public Financial Management System (PFMS) to track and monitor fund flow.

• New rules will help in addressing issue of time lag in release of grants, poor utilisation of funding and parking of funds in states for interest.


Mains Paper 3: Economy

Prelims level: Centrally Sponsored Scheme

Mains level: Read the newsfeed

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