Digitisation of Government Financial working

GOVERNANCE/ SCIENCE & TECH/ POLITY

Topic: General Studies 2,3:

• Executive and its functioning 
• e-governance- applications, models, successes, limitations, and potential 
• Awareness in the fields of IT, 

Digitisation of Government Financial working

Context: A case for three-phase transition to mandatory digital payments, accounting, and transactions for government proposed by the CAG under a new project and law called DATA (Digital Accountability and Transparency Act) 

What are the goals of DATA?

• The starting point is mandatory and common data standards for all entities receiving government funds in all forms of funding 
• The endpoint is a single searchable website to ascertain total government funding by element and entity

What steps are needed to make DATA a reality?

Covering the distance between these needs three elements: 

1. 100 per cent end-to-end electronic data capture: All receipts and expenditure transactions including demands, assessment, and invoices should be received, processed, and paid electronically.
2. Data governance for standards across all government entities: Data standards are rules for describing and recording data elements with precise meanings and semantics that enable integration, sharing, and interoperability.
3. Technology architecture that must ensure that all IT government systems should conform to a prescribed open architecture framework (for instance, IndEA) while ensuring robust security and maintaining privacy.

What are the advantages of DATA?

1. Long Overdue reform:

• • The Union budget grew from Rs 197 crore in 1947 to Rs 30 lakh crore in 2020 and total government expenditure may be higher than Rs 70 lakh crore.
  • But the form and manner of keeping accounts have more or less remained unchanged since Independence

2. Reduce errors 

• • Manual transactions and manual payments often lead to manually entered data at different stages in different databases on different systems which makes to unreliable & vulnerable to errors
  • DATA ensures Business continuity (electronic records cannot be lost or misplaced like files or paper records) and an incontrovertible audit trail

3. Enhance transparency & accountability

• • It makes all government revenue and expenditure data electronic, machine-readable, granular, comprehensive, purpose linked, non-repudiable, reliable, accessible and searchable.
  • It will enable legislatures to draw “assurance” that each rupee due to the government has been collected, and each rupee has been spent for the purpose it was allocated.

4. Addresses the problem of siloed IT systems 

• • Government computerisation has often mechanised manual processes rather than “re-engineered processes”.
  • This has created siloed IT systems with individual databases that lack modern data sharing protocols, which DATA tries to solve

5. Addresses concerns of fiscal data

• • Due to siloed IT systems, fiscal data was being
    • Incomparable – as basic as salary expenditure across states
    • Obscure – large expenditures booked under omnibus head called other
    • Non-traceable – actual expenditure against temporary advances drawn or funds drawn on contingent bills
    • Misclassification – grants in aid as capital expenditure and bookings under suspense heads

6. Enables the use of cognitive intelligence tools 

• • DATA will provide with huge information which will enable tools like Big Data analytics, artificial intelligence, machine learning to use it for policy making
  • This in turn will support the establishment of budget baselines, detecting anomalies, data-driven project costing, performance comparisons across departments.

7. Cost efficiency

• • Bad behaviour currently costs the RBI Rs 4,000 crore in bank agency commissions because many parts of the government do not use the RBI’s free e-kuber system

Connecting the dots:

• Justice B.N Srikrishna Committee recommendation on Data protection