Public Financial Management Reforms in India: Understanding State-level Experiences from the Implementation of Single Nodal Agency Reform in National Health Mission

The implementation of the Single Nodal Agency (SNA) in 2021, marks one of the most significant recent Public Financial Management reforms in budget execution of Centrally Sponsored Schemes (CSS). This study reviews the gains and challenges of the reform through an evaluation of its implementation in the National Health Mission (NHM) in Bihar and Odisha. The assessment draws on insights from unstructured key informant interviews with officials of the Finance departments, and stakeholders associated with NHM implementation across administrative levels including personnel in health facilities, and information collected from them during February 2023 to February 2024. The study shows that while the reform has achieved its intended gains in cash management for the central government and enhanced expenditure transparency through top-down oversight, several challenges remain in leveraging these gains from a scheme implementation perspective. Significant improvements are evident in the timeliness of fund releases from state treasuries and the reliability of utilization certificates, owing to better alignment of central releases with expenditures, and booking of near real-time expenditures. The digital platform needs to be augmented to facilitate more effective financial monitoring of schemes and to derive higher benefits. Constraints of digital infrastructure and human capacity for online financial transactions at lower levels of the implementation chain also need to be addressed. Continued reform measures will be essential to ensure that the enhanced expenditure transparency and financial oversight translate into better outcomes.