#Budget2017-18: In IMF style, treasuries pave way for PAO, BEAMS through MIS

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FinMin Dr Haseeb Drabu delivering budget speech. KL Image

In the new Public Management System that Dr Drabu proposed for adopting in the state for managing public finance, IT will be the key driver. Almost everything that is budgeted will be taken over by a software – already in vogue outside J&K, that will offer real time solution to the availability, movement, expenditure and disbursal of public funds. This system will make already marginalized treasury systems almost redundant.

The new system offers greater flexibility of inputs and processes in return for greater emphasis on outputs and performance, to quote Drabu exactly.

Mantra for the change is this: “The existing system doesn’t allow for an easy translation from policy to priorities to budget lines. In reality, expenditure budgeting is still largely incremental. The spending ministries and the political executive have limited roles in this phase. The result is very little ownership of the allocations done and the trade-offs made.”

Taking cue from an IMF model for government finances, Drabu is grouping grants from 29 departments into four major heads: Administrative, Infrastructure Development, Social Sector and Economic Development. Seemingly, this is aimed directly at knowing which sector takes what.

Taking the route of the new legislative framework for public financial management, the idea is to involve the political element in public spending and make the expenditure a dually-owned process. Finance Minister hopes it will shift the onus of managing the use of resources from central control to the spending departments and agencies at ground level.

To be followed up by a robust, quicker, transparent and efficient system, he has proposed introducing a computerised budgeting “Budget Estimation, Allocation and Monitoring System” (BEAMS). It is an online computerised system that distributes the budget and authorises the expenditure.

“As soon as the budget is released, the departments can allocate funds to their field officers through this system. All the expenditure thereafter will not only be checked for budget availability before the bills can be submitted, but also the monthly cash flows will be controlled against pre-determined targets. This system will permit the re-appropriation of funds within the prescribed limits and will allow withdrawal / surrender of budget grants,” Dr Drabu said in his budget speech. “The expenditure monitoring system now proposed will provide expenditure data to the Government on a real-time basis.”

Management Information System (MIS) will be automatically generated on budget authorizations, cash flows, fund transfer transactions and authorization slips. This will give more realistic picture of actual expenditure and bills in the process.

On this basis, the Drabu announced moving out of, what he said, “ancient and archaic system” of Treasuries. J&K’s treasury’s are surviving without cash and as mere gate-keepers since 1996 when farsighted finance department moved its transactions to J&K Bank. Now Anywhere Banking has made a cheque payable anywhere.

He has also proposed a reform in Government’s payment system by replacing the present Treasury System by a functionally aligned Pay and Accounts Office (PAO) System. For all receipts and disbursements of the Government, the Pay and Accounts Offices would be departmentally aligned. They would deal with those heads of accounts which are related to the function of their concerned departments. Instead of receiving the receipts and disbursing the payments of numerous departments in the treasury system, the PAO would deal with just one department. This will ensure better understanding of the department resulting in better forecasting, budgeting, accounting and reporting.

The new PAO system will be able to monitor and control the purpose and objective of payments, budgetary sanctions and ceilings, proper classification, and excess payment issues.

For budget control mechanism of audit and invoice checking at the department level, now bills / challans and invoices would not be physically carried to treasuries. Instead, a computerized Integrated Financial Management System (IFMS) will process all those functions online.

The new system will be in vogue from October 1, 2017 and complete the transition by March 31, next year.

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