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livemint.com / 1 month ago
livemint.com / 1 month ago
Mint Explainer | How demand-based fund release is improving the Centre's fiscal discipline
schemes.Integrated with states’ financial systems and the Reserve Bank of India's (RBI) e-Kuber platform, it allows funds to be released only when payments are actually due. The system shifts fund flow from an advance-based model to a demand-driven one.It is used across more than 50 centrally sponsored schemes, where spending is shared between the Centre and states—usually in a 60:40 ratio (and 90:10 for special category states).Earlier, ministries released funds upfront to states and implementing agencies.
This often led to large amounts sitting idle in bank accounts. Under SNA-Sparsh, funds are “pulled” in real time when payment instructions are generated, ensuring that funds remain with the Centre until needed.States had initially resisted as it reduced their control over parked funds, but have now begun adopting it.
The shift has led to a big increase in fund use.In FY26, ₹1.14 trillion was released through SNA-Sparsh compared to just ₹13,851 crore in FY25, an over eightfold jump.The gap between sanctioned and utilised funds has also narrowed. In FY25, against a ‘mother sanction’ of ₹24,369 crore, only about ₹13,851 crore (around 50%) was released.
In FY26, nearly the entire sanctioned amount was utilised, indicating close to full deployment.The Centre tracks spending through utilisation certificates, and this does not restrict the release of funds to states, since a large share of the money is directly transferred to beneficiaries, members, or groups instead of being routed through state governments.Why does this matter for fiscal management?
The model reduces the need for advance borrowing by the government. When funds are not released upfront, the Centre does not have to raise as much money in advance, leading to
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21.05 / 10:17
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How chronic illness became a starting point for artistic alchemy for Koshy Brahmatmaj
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21.05 / 10:17
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Even at $5 trillion, Nvidia is underappreciated
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21.05 / 10:17
markets
Digital
CEO
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markets
IPO
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21.05 / 09:47
markets
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FPIs exit Korea & Taiwan: Is India ready for the flow rotation?
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PI Industries’ weak core business keeps investors on edge
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Secured credit cards: Unlocking credit and building a credit score for millions
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Forensic audits support corporate-fraud probes and IBC cases but still lack enforceable standards
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UPS
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