New Delhi: In a move aimed at speeding up fund releases under centrally sponsored schemes and reducing delays in utilization, the government has introduced a new fund flow mechanism, allowing ministries greater flexibility in issuing sanctions to states.
According to a government notification, ministries can now adopt a more flexible approach by issuing ‘mother sanctions’—consolidated approvals that allow them to sanction funds for multiple centrally sponsored schemes and amounts in one go, instead of issuing separate approvals. These mother sanctions define the drawing limit for states to access central funds.
Under this framework, ministries can issue these sanctions scheme-wise, head-wise, or in a consolidated manner covering multiple state-linked schemes (SLS), as per the government notification reviewed by Mint. Earlier, ministries followed rigid formats, issuing separate ‘mother sanctions’ for each state-linked scheme with limited flexibility to combine or restructure approvals.
The revised Standard Operating Procedure was issued by the Controller General of Accounts (CGA), which functions under the Union finance ministry’s department of expenditure (DoE).
The move is significant as the Centre allocates around ₹5 trillion annually to centrally sponsored schemes including , Pradhan Mantri Awas Yojana (both rural and urban areas), National Health Mission, Samagra Shiksha, PM Poshan and PM Gram Sadak Yojana. Each of these schemes is divided into state-specific components in Public Financial Management System (PFMS), through which the Centre releases funds and monitors utilization at the state level.
PFMS, managed by the CGA, is a digital platform that facilitates from the Centre to states and tracks real-time fund utilization, boosting transparency and accountability.
Centrally sponsored schemes are development programmes funded jointly by the Centre and states, typically in a 60:40 ratio for most states and 90:10 for northeastern and hill states. There are 28 such schemes currently being implemented.
Experts said that this revamped mechanism will ensure that funds are disbursed closer to the point of actual requirement rather than being parked in advance.
“The flexibility to issue a single mother sanction for one state linked scheme or combine multiple state linked schemes within a single sanction, or to issue a consolidated sanction covering all such schemes, will not disrupt the federal structure. Rather, it will help states receive consolidated funds at one go,” said Arun Kumar, a former professor of Economics at the Jawaharlal Nehru University.
“However, it must be ensured that the funds allocated for different schemes are used only for those schemes and that states do not utilise more than the approved amount for any one scheme,” said Kumar.
The changes are effective from 1 April, and will be implemented along with enhanced features under the Single Nodal Agency Samyochit Pranali Ekikrit Shighra Hastantaran (SNA SPARSH) module of PFMS, which is designed to enable just-in-time release of funds.
Under the revised framework, ministries can issue a single mother sanction for one SLS, combine multiple SLS within a single sanction, or issue a consolidated sanction covering all SLS under a scheme. This replaces earlier rigid structures and is expected to reduce administrative delays in sanctioning and fund release.
The revised procedure also introduces tighter alignment between budget allocation and fund release. “Ministries will not be able to generate a mother sanction unless SLS-wise budget allocation has been entered and approved in the system, ensuring that releases are backed by approved allocations,” the government order said.
“The move is part of a broader push to improve efficiency in public financial management by reducing idle fund parking, improving utilisation, and enhancing transparency in the release and tracking of scheme funds,” said Arun Kumar Jha, former Indian Economic Service officer and chancellor of National Institute of Advanced Manufacturing Technology, Ranchi.