India’s weak state capacity is one of the primary reasons for its underperformance to deliver basic public goods such as public health, drinking water, primary education, areas. We believe that efficient public finance management is the most compelling function for governments to deliver public services.
MSC is working in India to reform the public finance landscape by applying the principles of public finance like Single Source of Truth, Just-in-Time funding, and Smart Payments for more efficient budget execution and expenditure management. MSC uses technology as an enabler by employing digital tools like virtual treasury single account (VTSA), smart payment engine, etc.
MSC works with the state governments in India and several ministries at the Union level to design and run pilots that solve these issues. We are also working with other developing countries, to gauge the effectiveness of these solutions and provide implementation support for replication.
Over the past few decades, Governments have made tremendous progress in digitizing PFM Systems. However, there is a need to take a fresh look based on the new ideas and technologies in the PFM domain. We believe that there is a scope for applying some of these digital tools and principles to resolve the challenges in public finance in general and public expenditure in particular.
Using some of these PFM principles and relevant technology tools, MSC has created the ‘PFM Readiness Index’. The index will help decision-makers gauge the maturity of the PFM ecosystem and chart a course for reforming PFM systems, with a focus on public expenditure. The index can also act as a leading indicator to address the plumbing problems in the systems across various levels in Government.
The PFM Readiness Index rates a government system on parameters aligned to four principles: Just-in-time funding, Single source of data, Observability and De-monopolizing access to public funds and services. The rank received by a government agency on a PFM Index will provide a clearer pathway to improved accountability, lower administrative burden, and frictionless expenditure.
The government is still struggling with loopholes in the delivery of payment to states and agencies working at the last mile. MSC’s proposed smart payment playbook may be used by governments looking to enable frictionless expenditure, decrease administrative burden, and increase accountability in their payments processes. It will allow them to identify the gaps in their current processes and implement Smart Payments as an effective solution.
The purpose of this playbook is to facilitate the practical applicability of the Smart Payments framework in the context of government-to-government (G2G) payments, especially grants-in-aid. This playbook can be used by governments, both Central and state, to help them automate their payment processes and thereby achieve significant efficiencies. It can also be used as a reference for any government department looking to automate its payment processes.
Financial Information Exchange (FIX) Platform , a product of e-gov foundation, facilitates the exchange of financial information between various stakeholders. FIX has the potential to be the new frontier of ‘GoodTech’ that can transform data fidelity and data silo issues in the PFM ecosystem in India. MSC has proposed the vision and conceptual framework for IFIX, which is to provide a federated, highly scalable, fault-tolerant, and secure platform that enables the exchange of all financial information within the PFM lifecycle at all levels of government. This platform will enable multiple stakeholders within the PFM ecosystem to coordinate their actions and enhance accountability, through seamless exchange of data, for better outcomes such as innovation, efficient service delivery, and a more user-centric experience. It will also enhance efficiency, as the data is entered at the primary source and flows to all systems that require to use of that information, creating interoperability and ensuring safe exchange of data. This will facilitate the creation of new solutions that provide improved access and service quality.
We at MicroSave Consulting are helping governments build their capacity to serve their people. If you believe reforms in the public financial management systems are the way forward, be a part of our community of practice. Reach out to our team members at the PFM practice. You can write to us at email@example.com