Unspent Central funds to states to be settled in real time from Apr 1
Centre sends to states through the single nodal agency (SNA) will happen within a day from April 1, eliminating the need to park it outside the government account for more than 24 hours.
The SNA account is used for transferring funds to states for centrally sponsored programmes and there are timelines for the expenditure. The settlement of unspent money currently happens on a quarterly or monthly basis. The Department of Expenditure and the Reserve Bank of India are working together to upgrade the SNA system to settle the unused amount by the states in real time, which will also eliminate disputes over the payment of interest earned on such unspent funds lying in state SNAs, officials in the know said.
The government and the banking regulator have already launched a pilot project in five states and will implement it across India from April 1, they said.
«This is taking the SNA functionality to the next level, making the usage of funds more efficient and in a more transparent manner,» a senior official told ET.
Currently, states are earning interest accrued on the unutilised funds lying with the state-level single nodal agencies, the official said. Several states have not paid interest on the Centre's share on such funds, he added.
With most of the states not complying with the communication sent to them on sharing of the interest, the Centre has said unless the states pay the interest by March 31, it would not release the 50-year interest free loans offered to them. «With the new SNA functionality, that
