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ARTICLE AD BOX
Summary
A single nodal agency, rolled out in 2021–22, now ensures that funds are released only when they are needed, replacing the earlier practice of upfront transfers under centrally sponsored schemes.
The Centre has not just changed how much it spends, it has also changed how it spends. A single nodal agency, rolled out in 2021–22, now ensures that funds are released only when they are needed, replacing the earlier practice of upfront transfers under centrally sponsored schemes. The mechanism under the public financial management system (PFMS) cuts idle cash and lowers borrowing costs.
The shift to just-in-time releases, backed by real-time visibility of fund flows, is beginning to show results. As fiscal pressures rise, tighter control over spending and lower idle balances are helping the government manage its borrowing needs more efficiently.
What is SNA-Sparsh, and how is it different from the earlier system?
SNA-Sparsh (Single Nodal Agency – Samayochit Pranali Ekikrit Shighra Hastantaran) is a “just-in-time” fund release system for centrally sponsored 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.
How effective has it been?
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 savings on interest costs.
It also improves the quality of expenditure by ensuring funds are used when required.
Does this reflect a broader shift in fiscal policy?
Yes. The system reflects a broader shift in fiscal policy, moving from a focus on allocations to one on efficient, timely spending. By tightening control over fund flows, the government aims to improve transparency, reduce waste, and manage borrowing more effectively.
Economists say SNA-Sparsh marks an important shift in fiscal management, as it moves the focus from how much is allocated to how effectively funds are spent.
“Tighter control over fund flows can improve transparency and reduce leakages, while also helping the government better manage its borrowing needs,” said Abhash Kumar, assistant professor, economics, Delhi University.
However, it will need strong coordination with states to ensure that faster and more direct transfers do not create operational challenges at the implementation level, Kumar cautioned.
India is sharing its digital public finance tools, including PFMS-based systems, with countries across Africa, Latin America and Asia.
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