Treasury Computerization in India: A Case Study

The Treasury Operation

The receipts and payments of funds in India are maintained in two separate classes of accounts. One of the accounts relates to the funds of Government of India and the other relates to the individual State Governments. The funds of the Government of India are maintained in the Consolidated Funds of the Union and those of the State Government are maintained in the Consolidated Funds of the State. All the receipts and payments into the Consolidated Funds of the Union and the State are made by the treasury. The treasury operations of the State Government are carried out through different steps. These steps define how the revenue collected by the state is to be spent in the various programmes of the government. A block diagram of the process is as shown in Figure 1.

Figure 1.

Financial management system of the government

These respective consolidated funds consists of taxes and duties collected by the respective government, contribution of taxes and duties collected by the other governments, interest, unspent balances of the previous years and any loan raised by the government by issue of treasury bills or money received as a repayment of loans.

The funds available with the government in the consolidated fund of the State or the Union can only be spent if they have been approved as part of the Budget. The sanction orders are issued by the various departments on the basis of which the Drawing and Disbursing Officers (DDO) of various departments are authorized to withdraw funds from the treasuries. These DDOs are based in the various districts and the state headquarters in the State Government. The DDOs are the only officers authorized by the government to draw funds from the consolidated funds of the State as per the sanction order of the government. A block diagram of the operations that occur in the treasuries is in figure 2.

Figure 2.

Block diagram of a treasury

The function of the treasury could be summarized into the following broad categories:

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  Payment of bills: Receiving claims from Drawing and Disbursing Officers, scrutiny of claims as per State Treasury Code, Financial code and relevant rules, on-line generation / issuance of cheques

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  Receipts: Entry of credit scroll received from banks against challans, deposited refund of revenue as per advice issued by competent authority.

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  Accounts Preparation: Preparation of Receipt and Payment Accounts with the details of Head of Accounts, Incorporation of Sub-Treasury accounts in Treasury accounts, Submission of accounts to AG, providing a monthly list of receipts and payments to all Drawing Officers of the concerned department.

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  Pension Generation/Pension Payment: Preparation of pension, gratuity and commutation payment order, payment of pension, revision of pension cases, cash/ cheque payment of pension from Treasury.

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  Deposits: Maintenance of personal deposits, civil deposits, education deposit and revenue deposits, issue of Treasury cheque against cheque received from deposit holders,
maintaining strong room, issue of stamps, safe custody of valuables and duplicate keys, packets deposited by civil courts and different offices in the district, maintenance of bill, Token books & Cheque books.