Key Achievements (2025‑26)

  • Scaling Direct Benefit Transfer (DBT)
  • PFMS underpins 966 DBT schemes, facilitating Rs 2.87 lakh crore in real‑time payments through 210.56 crore transactions up to 31 Dec 2025.
  • Initiatives: DBT Open House sessions, regional conclaves, Centre‑State collaboration.
  • Scheme for Special Assistance to States for Capital Expenditure (SASCE)
  • Outlay raised from Rs 12,000 crore (2020‑21) to Rs 1.5 lakh crore (2025‑26).
  • Disbursed Rs 4,44,845 crore to states; provides 50‑year interest‑free loans for capital projects.
  • Capital spending multiplier estimated at Rs 3 of GDP for every Rs 1 spent.
  • State Borrowing Reforms
  • Net Borrowing Ceiling (NBC) fixed at 3 % of GSDP for 2025‑26 per the 15th Finance Commission.
  • Performance‑linked incentive: additional 0.5 % of GSDP borrowing tied to power sector reforms and DBT efficiency.
  • Public Procurement Modernisation
  • Revised manuals for Goods, Consultancy & Non‑Consultancy Services, and Works.
  • Introduced reverse auctions, performance security reforms to ease business.
  • Disaster Management Funds
  • Central share released: Rs 18,000 crore (State Disaster Response Fund) and Rs 5,200 crore (State Disaster Mitigation Fund).
  • Other funds: NDRMF, NDMF, PMNRF.
  • Grievance Redressal
  • Automated CRM system resolves >150,000 grievances annually.
  • Pay Reforms
  • Constituted the 8th Central Pay Commission for revising pay structures.

Constitutional & Legal Provisions on Borrowing

  • Article 292 – Authorises the Union to borrow on the security of the Consolidated Fund of India, subject to parliamentary limits.
  • Article 293 – Governs State borrowing; Article 293(3) requires prior consent of the Union if a State owes the Centre.

Current Debt Structure

  • Central Government debt‑to‑GDP: 57.1 % (2024‑25), 56.1 % (2025‑26); target 50 % ± 1 % by 2030‑31.
  • State Governments: Account for ≈ 33 % of total General Government debt; contributed > 50 % of debt rise (2014‑15 to 2019‑20).

Ministry of Finance – Overview

  • Manages taxation, financial legislation, capital markets, Centre‑State finances, Union Budget.
  • Departments: Economic Affairs, Revenue, Expenditure, Financial Services.
  • Department of Economic Affairs: Budget preparation, macro‑economic policy, public debt, capital markets.
  • Department of Financial Services: Banking, insurance, pension reforms, key schemes (PMJDY, PMSBY, PMMY).

Significance for India

  • Fiscal Efficiency: Digital DBT and procurement reforms reduce leakages and improve service delivery.
  • Co‑operative Federalism: SASCE and NBC balance State autonomy with macro‑economic stability.
  • Economic Growth: Capital expenditure boost via SASCE enhances productive capacity and attracts private investment.
  • Disaster Resilience: Dedicated funds improve preparedness and response.

Related UPSC Mains Question

Examine the role of the Scheme for Special Assistance to States for Capital Expenditure in boosting economic growth.

FAQs

  • Q: What role does PFMS play in India’s DBT ecosystem?

A: Enables real‑time, transparent fund transfers across 966 schemes, ensuring fiscal accountability.

  • Q: How does the Net Borrowing Ceiling support fiscal discipline?

A: Capping borrowing at 3 % of GSDP curbs excess debt while allowing needed capital spending.

  • Q: What is the constitutional basis for Union and State borrowing?

A: Articles 292 and 293 of the Constitution.