New money transfer system: Many centrally-sponsored schemes in U.P. face funds crunch
Under the previous system, centrally sponsored scheme funds were routed through the state exchequer, allowing departments to access their share more readily
Many centrally-sponsored schemes in Uttar Pradesh are facing implementation challenges due to delays in fund disbursement following the introduction of a new central payment system called SNA-Sparsh, people in the know of things said.
The Swachh Bharat Mission (Rural) is one such scheme that is facing acute crunch of funds with authorities bringing the concerns to the central government and demanding release of early funds to keep the works under floating.
“It is true our Swachh Bharat Mission (Rural) is facing funds crunch for implementation for quite some time due to change in the system of transfer of funds for centrally-sponsored schemes. We are regularly urging the central government authorities to release some funds,” mission director Raj Kumar said when contacted over the phone.
In a letter dated early this week, he urged the Centre to expedite the release of the first tranche of funds under the new system. The letter highlights that only about ₹13-14 crore remains in the state’s SNA (single nodal account), creating operational difficulties for this crucial scheme.
The transition from the traditional fund flow mechanism to the new SNA-SPARSH system, which enables direct drawing of funds from the Reserve Bank of India, has created a temporary vacuum in funds availability for most government implementing the centrally-sponsored schemes.
Under the previous system, centrally sponsored scheme funds were routed through the state exchequer, allowing departments to access their share more readily.
The letter points out that it takes more than 15 days for funds to be transferred to the SNA after receiving central approval and matching state share. This procedural delay, coupled with the fact that the new system’s portal is still under development by the treasury directorate, has created significant implementation hurdles.
The financial data presented in the letter shows substantial fund utilisation in the previous period, emphasising the urgent need for fresh allocation of funds to maintain the scheme’s momentum.
State officials have requested immediate release of the first tranche to prevent any further disruption to the scheme’s implementation, highlighting the critical nature of maintaining sanitation programs without interruption.
“Earlier, funds would come to the state government first. Now, they’re supposed to flow directly from RBI. But the new system is not fully ready yet even as the old system has been stopped because of which money is not flowing either way,” said a senior rural development official requesting anonymity.
He said the finance department was regularly holding videoconferences with the department concerned to discuss the issue and monitor their preparedness to work under the new system.
The Centre announced SNA-Sparsh initiative in January 2024 and for last few months, it has started routing funds for centrally sponsored schemes through the RBI instead of state treasuries.
“This aims to curb fund idling, improve spending efficiency and reduce borrowing. The move is part of the “just-in-time” release strategy under the SNA-Sparsh model. Previously, funds were transferred to state treasuries before reaching implementing agencies,” a state finance department official explained, adding “Some problems are coming due to the transitional phase and we expect everything to be in place very soon.”
