The Government of Punjab issued a notification on 19th February, 2024 and introduced the Consolidated Sinking Fund Scheme, also known as ‘the Fund’, with the aim of effectively managing and redeeming its outstanding liabilities. Commencing from the financial year 2023-24, this Scheme serves as an Amortisation Fund dedicated to the redemption of the government’s outstanding liabilities. The Fund, operational from the notification date, replaces the existing fund under the extant CSF scheme adopted by the Government. It mandates that 50% of the outstanding corpus held in the CSF as of 31st March 2024 of the second preceding financial year, or the redemption amount due during the financial year, whichever is lesser, be considered for determining the maximum eligible limit for withdrawal from the CSF annually.
Furthermore, the Fund is solely earmarked for the redemption of the government’s outstanding liabilities, emphasizing its dedicated use for financial prudence. Additionally, the State Government has the provision to avail short-term accommodation under the Special Drawing Facility (SDF) from the Reserve Bank of India against the collateral of investments made in the CSF to address temporary cash flow mismatches. The Scheme highlights the importance of the government’s contributions to building up the CSF corpus to five percent of the outstanding liabilities within five years, allowing investments from various revenue sources to optimize financial resources.
The Fund’s administration falls under the Central Accounts Section of the Bank in Nagpur, ensuring efficient management and oversight of investments, primarily in government securities and state government securities. With detailed guidelines on account transactions, investments, and withdrawals, the Scheme underscores the government’s commitment to sound financial stewardship and effective debt management practices. Moreover, the Fund’s accounts and investments are maintained by the Accountant General of the State, with the government paying a commission to the Bank for administering the Fund. Overall, the Consolidated Sinking Fund Scheme showcases Punjab’s strategic approach towards financial sustainability and prudent debt management, setting a precedent for transparent and accountable fiscal operations.
