Paperless payments, faster fund release, better tracking: How 3 new initiatives will change defence finances

Defence Minister Rajnath Singh, on Friday, launched three major digital initiatives aimed at improving the management, tracking and processing of defence finances, pushing the defence ministry towards greater integration and real-time visibility of expenditure.

The initiatives, unveiled during the Defence Accounts Department’s (DAD) 279th Annual Day celebrations at DRDO Bhawan in New Delhi, focus on integrating the the Indian Army and DAD's financial information systems, introducing the Treasury Single Account (TSA) system and revamping the National Compilation System (NCS).

Together, the measures seek to make defence payments more digital and paperless, improve the management of funds and provide more accurate information on budgets and expenditure.

SAKSHAM-IAFIS integration

The first initiative integrates DAD's SAKSHAM bill audit and payment system and the Indian Army Financial Information System (IAFIS).

The integration enables digital transmission of budget, sanction and bill information between the two organisations, reducing dependence on paper-based processing.

It will also allow real-time sharing of information on the status of bills and available budget balances. The initiative marks a step towards complete digitisation of the defence payments ecosystem and fully paperless processing of bills.

Singh stressed the wider importance of integrating financial systems at a time when greater emphasis is being placed on jointness and integration among the armed forces. “Today, the Army, Navy, and Air Force are working together. In such a scenario, if our financial systems are also integrated, the entire defence management will become even more efficient,” he said.

Treasury single account

The second initiative is the Treasury Single Account system in the defence ministry, launched with the intention of enabling just-in-time release of funds to autonomous bodies under the government of India.

The TSA has been operationalised through the Payment Routing and Integrated System Management (PRISM) platform and is fully integrated with E-Kuber, the Reserve Bank of India's electronic Core Banking Solution platform.

The system is expected to improve grant management for autonomous bodies under the defence ministry while providing greater visibility of accounting and expenditure.

Revamped NCS

Singh also launched the revamped NCS, which serves as the single source for accounting and compilation of all defence expenditure in India.

The defence ministry operates under a financial delegation framework that requires budget allocations and expenditure to be tracked across different Controllers of the Defence Accounts Department around the country.

The revamped NCS has been redesigned on a new technical architecture to improve the accuracy of budget reporting and expenditure monitoring.

It will also enable granular reporting to the finance ministry, defence ministry, Service Headquarters and Field Controllers, helping improve policy planning and budget management, according to a government release.

Singh called for defence financial management to move beyond an “annual review of balance budget” towards an “any time review of balance budget”.

“When we say that we are building a digital India, it means that our systems should be so smart that at any time, at any moment, we know what our financial position is,” he was quoted as saying.

The defence minister described DAD as the “backbone” of the defence system, pointing to its role in ensuring timely payments and proper allocation of resources.