WP 2018

NIPFP Working paper series
NIPFP Working
Working paper
Paper No. 227series
Utilisation, Fund Flows and Public Financial

Management under the National Health
Mission
No. 227
04-May-2018
Mita Choudhury and Ranjan Kumar Mohanty
National Institute of Public Finance and Policy

New Delhi
Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 0

Working Paper No. 227
Utilisation, Fund Flows and Public Financial Management under the

National Health Mission
Mita Choudhury1 and Ranjan Kumar Mohanty2,3
Abstract
This study provides insights on how institutional architecture for public fund flows
affects budget execution. Using the case of the National Health Mission (NHM) in India, it
highlights how the rules and procedures that govern release of public funds affect
utilisation of budgeted resources. It analyses the utilisation of NHM funds in 29 States, and
documents the processes for fund releases from State treasuries to implementing
agencies in Bihar, Maharashtra and Odisha. The study finds that on average, only about 55
per cent of funds allocated for NHM were utilised in 2015-16 and 2016-17. In Bihar and
Maharashtra, this was partly due to significant delays in release of funds from State
treasuries to implementing agencies. The delays were a result of complex administrative
procedures associated with the release of NHM funds from State treasuries. The existence
of implementing agencies outside the States’ administrative setup, and the rigid
fragmented financial design of NHM has contributed to the complicated architecture of
release processes.
Key Words: Public Fund Flow, Fund Utilisation, Public Financial Management, Budget
Execution, National Health Mission
1
Mita Choudhury, Associate Professor, National Institute of Public Finance and Policy.
2
Ranjan Kumar Mohanty, Economist, National Institute of Public Finance and Policy.
3
We are thankful to Mr. Anil Garg, former Consultant, Ministry of Health and Family Welfare for
extending support to the study. We are also thankful to Jay Dev Dubey for insights on various parts of
the study.
Accessed at http:// http://www.nipfp.org.in/publications/working-papers/1820/ Page 1

1. Introduction
Institutional structure for public fund flows has an important bearing on the
effective use of budgeted resources. An understanding of this institutional architecture,
including the rules and procedures that govern the release and utilisation of public funds,
is essential for improved use of public resources.
In a federal structure of Government, public funds have to flow through multiple

levels of governments and administrative units before these can be spent for the
designated goods and services. In India, several public schemes are initiated at the
National level and implemented at the sub-national level. In such schemes, public funds
flow through a number of decentralised units (States, districts, blocks and lower-level
structures) before they can be spent for the purpose. The processes involved in release of
funds at each tier of the decentralised architecture have important implications for budget
execution.
Execution of health budgets in developing countries has received considerable

attention in recent years (Barroy H. et al., 2016; Cashin C. et al., 2017; Welham B. et al.,
2017). This attention has gained momentum following the commitment to Universal
Health Coverage (UHC) in many countries. It has been argued that UHC would not only
involve a larger commitment to public spending on health, but also more effective use of
public resources. With fiscal parameters constraining public spending on health in many
developing countries, the improved use of public resources through better budget
execution can play an important role in complementing the Government's efforts in
expanding the resource envelope for UHC.
Empirical evidence of poor budget execution in the health sector has been
highlighted in a few developing countries. Studies in Nepal and Ghana have shown how
delays in transfer of funds in the health sector leads to underutilisation of health budgets
and affect service delivery (Hart, 2017; Blanchet et al., 2012; Schieber et al., 2012). The
factors that lead to delay in transfer of funds have been less explored. Country specific
studies in local contexts are required for an understanding on the issue (Welham B. et al.,
2017). This study attempts to contribute in that direction.
In India, preliminary studies on selected schemes initiated by the National

Government had also pointed out problems of budget execution (Gupta et al., 2011;
Gayithri, 2012; Choudhury et al., 2013; Barker et al., 2014; Bhanumurthy et al., 2014).
These studies have argued that the nature of involvement of different tiers of Government
and administration, and the institutional features associated with them have lowered the
effectiveness of funds allocated to many of these schemes. Many schemes are
decentralised in nature and the poor capacity for planning and implementation at the
lower units of the decentralised structure has been argued to result in poor budget
formulation and execution of these schemes. Further, in the decentralised structure,
coordination between the lowest decentralised unit in States and the highest unit at the
national level for planning and execution is often time consuming, and this delays the
process of budget approval and execution of these schemes. Moreover, institutional gaps

like the vacancies of staff at the lowest levels of implementation units and improper
planning across different components of budgets have been argued to lower the
effectiveness of the resources allocated to these schemes.
A recent reform related to the institutional architecture for public fund flows in
India has opened up the possibility of exploring implications of such changes. Till March
2014, funds for various schemes initiated by the National Government were directly
transferred to implementing agencies in States, bypassing the treasuries of the State
Governments. Since April 2014, funds for such schemes are being released to State-level
implementing agencies through the treasuries of the sub-National (State) Governments.4
The reform has added an additional layer in the architecture of fund flows under schemes
sponsored by the National Government.
This study focuses on the institutional architecture for the release of funds from
State treasuries to implementing agencies, and its relationship with budget execution in
India’s health sector. Specifically, we undertake an examination of funds under the
National Heath Mission (NHM), to derive insights on the institutional features that affect
the extent to which resource allocations for the health sector are optimally used for
providing health services. NHM is the single largest scheme in India’s health sector, and
constitutes about a third of all Government health expenditures in the country. We
examine the utilisation of NHM funds in 29 Indian States in 2015-16 and 2016-17 and
highlight the institutional arrangements for release of funds from sub-National
Governments to State-level implementing agencies of the scheme in three selected States:
Odisha, Bihar and Maharashtra. It provides evidence on the factors that contribute to poor
execution of health budgets in India.
2. Data and Methodology
The extent of utilisation of NHM funds is analysed here using the utilisation ratio.
The utilisation ratio is defined as the ratio of actual expenditure to total allocation. For
calculating utilisation ratios, data on actual expenditures (both aggregate and quarterly)
have been compiled from the Financial Management Reports (FMRs) of States for the
respective years.5,6 For State-wise allocation under NHM, data have been compiled from
the Record of Proceedings (RoPs) of each State provided by the Ministry of Health and
Family Welfare.7 It is important to note that the approved allocation figures in RoPs are
4
This was based on the recommendations of the High-level Expert Group, which was constituted by the
National Government in 2010 for suggesting reforms on Efficient Management of Public Expenditure.
5
Financial Management Reports (FMRs) are quarterly expenditure statements submitted by State-level
implementing agencies (State Health Societies) to the Ministry of Health and Family Welfare. It indicates
the quarterly expenditure against the allocation for each budget head under NHM.
6
As FMRs for both the years excluded expenditure towards ‘Infrastructure Maintenance’ (IM), the al-
locations for IM were also netted out from total approvals to calculate the utilisation ratio. In other
words, the utilisation ratios calculated here is net of the IM component. It includes the components
RCH-Mission Flexible Pool, Flexible Pool for communicable Diseases and Flexible Pool for non-communi-
cable diseases and NUHM.
7
These include the approvals made through supplementary RoPs as well. The RoPs is the minutes of
the meeting of the National Program Coordination Committee (NPCC) for NHM, which highlights the
State-wise final approvals for NHM in each year.

inclusive of both committed and uncommitted unspent balances available in States. It also
includes the resources expected from State Governments in the form of matching
contribution to the scheme. The utilisation ratio here therefore, reflects the utilisation out
of all funds potentially available for the scheme.
The choice of States for understanding institutional structures was based on the
extent of utilisation of NHM funds in 2015-16 and 2016-17. Odisha was taken up as a
State which had one of the highest utilisation ratios in the country, whereas Bihar and
Maharashtra were chosen for relatively poor utilisation: the utilised amount was less than
half the allocated funds in these States. The insights drawn with respect to individual
States were based on unstructured interviews and data provided by officials of State
Health Societies (SHSs), Department of Health and Family Welfare and the Finance
Departments of the three States for 2015-16 and 2016-17.8
3. Utilisation of Funds under the National Health Mission
Utilisation of NHM funds was remarkably low in both the years. On average, only
about 55 per cent of the funds allocated to States were actually spent (Table 1). The
utilisation ratio was marginally lower in the group of States with poor health
achievements (High-Focus States) than those with relatively better health achievements
(Non-High Focus States). This is an area of concern as NHM funds were primarily meant
to support health spending in poor performing States. Also, utilisation of NHM funds was
higher in some of the better-off States like Tamil Nadu, Kerala, Gujarat and Punjab than
poor States like Bihar, Uttar Pradesh and Jharkhand. This is can potentially accentuate the
inequality in health spending across States. Interestingly however, even among the worse-
off States, there are a few exceptions: Madhya Pradesh and Odisha ranked high in terms of
utilisation ratios. In contrast, Maharashtra a relatively better-off State stood at the bottom
in fund utilisation in both the years (Table 1). In the high-focus North-Eastern States (N.E.)
with the exception of Assam and Arunachal Pradesh), the utilisation ratio was low in both
the years (Table 1).
The overall utilisation ratios are affected by systematic differences in utilisation

ratios among its components. The utilisation ratio in the RCH flexible pool (RCHFP) was
higher than Mission Flexible pool (MFP) in almost all States. Similarly, the combined
utilisation of RCHFP and MFP was higher than those of other components of NHM in
almost all States (Table 1). Given that there are no major systematic differences in the
procedure of release among various components of NHM, these differences can be
attributed to other institutional weaknesses.
The problem of low utilisation is further compounded by a disproportionately high

share of expenditure in the last quarter of the financial year. On average, about 40 per cent
of total expenditure in States was incurred in the last quarter (Table 2). Among the high-
focus N.E. States, the share of expenditure in the last quarter was even higher; more than
two-thirds of total expenditure. Notably, although Assam and Arunachal Pradesh had
8
SHSs are the State-level implementing agencies for NHM in each State.

better utilisation ratios than other N.E. States, bulk of the expenditure (more than 70 per
cent) was incurred in the last quarter. The disproportionate expenditure in the last
quarter of the financial year in States could be due to delay in flow of funds to
implementing agencies, which limits the availability of funds for expenditure at a specific
point of time.

Table 1: Overall and component-wise utilisation ratios under the National Health Mission, 2015-16 and 2016-17 (per cent)
States 2015-16 2016-17
Part I: (RCH/Mission FP, Part II Part III Part IV Part I: (RCH/Mission FP, Immunization, Part II Part III Part IV
Overall Immunization, NIDDCP (FP_CD) (FP_NCD) (FP_NUHM) Overall NIDDCP (FP_CD) (FP_NCD) FP_NUHM
Total RCH_ FP M_FP Total RCH_ FP M_FP
High-Focus States (Other than North-East)
Bihar 51 53 65 35 40 16 29 44 47 61 32 36 17 30
Chhattisgarh 56 64 71 60 63 14 49 67 69 66 71 66 30 70
Himachal Pradesh 59 63 65 61 49 29 9 69 71 79 68 49 22 53
Jammu and Kashmir 58 73 80 66 65 29 83 56 61 72 49 40 7 51
Jharkhand 42 44 52 35 87 11 - 48 54 74 37 48 26 15
Madhya Pradesh 74 - 68 59 53 70 71 76 67 54 61 54
Odisha 75 81 84 80 64 44 64 69 71 88 60 64 40
Rajasthan 58 59 69 54 48 65 44 57 59 70 52 53 53 55
Uttar Pradesh 45 45 61 37 45 27 48 45 44 56 37 57 37 55
Uttarakhand 62 67 75 54 12 12 71 58 70 71 65 49 11 60
Average 59 71 50 66 47
54 52 33 50 54 55 52 35 58
Non-High Focus Large States
Andhra Pradesh 67 75 83 71 54 37 25 71 74 74 73 63 68 55
Gujarat 75 72 72 71 84 98 76 83 82 89 78 95 73 84
Haryana 60 74 79 63 50 31 60
Karnataka 55 67 67 65 72 45 23 40 36 55 24 72 48 69
Kerala 70 76 79 72 62 89 63 80 84 85 82 51 56 76
Maharashtra 44 49 65 39 65 41 21 45 48 54 45 60 37 21
Punjab 69 64 77 56 64 53 46 79 82 88 82 62 55 79
Tamil Nadu 74 49 60 44 74 71 67 80 82 80 88 56 86 78
Telangana 30 36 63 20 29 14 5 33 36 51 25 24 10 28
West Bengal 45 59 58 60 49 12 10 62 68 76 64 64 18 38
Average 56 58 67 52 61 42 32 57 61 69 56 60 46 47
High Focus North Eastern States
Arunachal Pradesh 73 99 75 37 13 71 63 62 56 67 72 48
Assam 68 69 75 65 49 39 55 72 76 77 76 39 32 57
Manipur 51 64 53 74 29 41 29 30 36 49 27 19 6 16
Meghalaya 42 72 77 70 38 13 65 43 45 54 41 40 24 26
Mizoram 46 70 72 69 - 22 57 42 44 49 38 37 42 16
Nagaland 32 60 73 45 15 - 48 36 40 46 35 16 24 39
Sikkim 49 50 66 40 61 66 60 59 63 69 60 42 52 31
Tripura 47 47 60 41 36 36 25 53 53 63 48 98 39 28
Average 60 69 73 66 44 35 57 57 64 68 61 41 31 40
All States 55 60 70 52 55 37 38 55 58 67 51 54 39 50
Source: Actual Expenditures have been compiled from the FMR of States. Data on total budget have been compiled from the RoPs/supplementary RoPs and FMR of States. Total budget includes both committed
and uncommitted unspent balances in each year and the resources expected from both the Union and State Governments for the scheme.
Note: RCH_FP refers to Flexible Pool for Reproductive and Child Health; M_FP refers to Mission Flexible Pool; FP_CD refers to Flexible Pool for Communicable Diseases; FP_NCD refers to Flexible Pool for Non-
Communicable Diseases, and FP_NUHM refers to Flexible Pool for National Urban Health Mission.
As FMRs do not include information on expenditures under ‘Infrastructure Maintenance’ (IM), these were excluded from the above analysis. The FMRs of States included information on four components:
NRHM-RCH Flexible Pool’ and ‘Flexible Pool for Communicable Diseases’, ‘Flexible Pool for Non-Communicable Diseases’ and ‘National Urban Health Mission’. The figures in the above table include all these
four components.
Utilization is calculated as actual expenditure as a percentage of total budget in respective parts.

Table 2: Cumulative expenditure in each quarter under the National Health Mission, 2015-16 and 2016-17 (per cent)
States Expend. between Apr-Jun (Q1) Cum expend at the end of Sept. (Q2) Cum expend at the end of Dec (Q3) Cum expend at the end of Mar (Q4)
2015-16 2016-17 2015-16 2016-17 2015-16 2016-17 2015-16 2016-17
High-Focus States (Other than North-East)
Bihar 7 9 26 29 54 44 100 100
Chhattisgarh - 19 36 39 59 64 100 100
Himachal Pradesh - 9 37 44 61 62 100 100
Jammu and Kashmir - 14 33 35 52 60 100 100
Jharkhand - 16 24 41 55 61 100 100
Madhya Pradesh - 8 36 33 61 58 100 100
Odisha - 9 36 35 60 61 100 100
Rajasthan 17 14 39 37 65 63 100 100
Uttar Pradesh 8 12 27 35 55 58 100 100
Uttarakhand 13 13 30 28 67 56 100 100
Average 6 12 32 35 58 58 100 100
Non-High Focus Large States
Andhra Pradesh - 11 26 32 72 58 100
Gujarat - 11 28 31 53 55 100 100
Haryana - 15 42 39 61 61 100 100
Karnataka - 11 31 36 54 61 100 100
Kerala - 14 36 33 60 64 100 100
Maharashtra - 7 28 26 57 59 100 100
Punjab - 17 40 37 64 62 100 100
Tamil Nadu - 7 38 40 52 69 100 100
Telangana 17 13 34 29 58 52 100
West Bengal - 15 37 37 60 59 100 100
Average 1 11 33 34 58 60 100 100
High Focus North Eastern States
Arunachal Pradesh - 6 28 19 77 34 100 100
Assam - 10 33 30 70 58 100 100
Manipur 7 18 31 47 56 68 100 100
Meghalaya 17 13 27 30 49 72 100 100
Mizoram - 17 33 37 51 56 100 100
Nagaland - 13 44 30 70 61 100 100
Sikkim - 17 39 40 59 51 100 100
Tripura - 14 37 28 63 61 100 100
Average 1 11 33 30 67 57 100 100
All States 4 12 32 34 59 59 100 100
Source: Financial Management Reports (FMRs) of respective States

4. Timeliness of Fund Flows in the Selected States
There has been substantial delay in release of funds from State treasuries to bank
accounts of SHS in Bihar and Maharashtra in the two financial years. In both the States,
about 80 to 85 per cent of all funds received were credited to the bank account of SHS with
a time lag of more than two months (Table 3 and Table 4). In Bihar, the delay was
particularly high in 2016-17. More than 80 per cent of all funds received in 2016-17 were
credited to the bank account of SHS after a gap of 3 months (Table 3). Even in Maharashtra,
about 14 per cent of all funds received in SHS account in 2016-17 were credited with a lag
of more than 3 months (Table 4).
The substantial delay in release of funds from the State treasury to the SHS account
has adversely affected the utilization of funds in Bihar. In 2016-17, the delay resulted in a
situation where the first instalment of NHM funds reached the SHS only by the end of
December 2016, leaving only the last quarter to spend the amount (Table 5). This could
be partially responsible for the fact that about 56 per cent of all expenditure in the State
in that year was incurred in the last quarter (Table 2). Notably, the first instalment (which
was credited to SHS at the end of December) constituted nearly 80 per cent of all funds
received in that financial year. The remaining 20 per cent of the funds received in that year
was received only on 31st March, the last day of the financial year (Table 5). In general, no
funds sanctioned (approved for release) since November 2016 could be credited to SHS
account before March 2017 (Table 5). Even in 2015-16, about 45 per cent of funds were
received in the last quarter, of which 18 per cent were credited only in March (Table 5).
This again could be partially responsible for the fact that nearly half of all expenditure in
that year (46 per cent) was incurred in the last quarter.
In Maharashtra too, the delays had adverse effects on utilization of funds. In 2016-
17, about a quarter of the funds released to State treasury from the Consolidated Fund of
India, could not be released to SHS. Of the GoI funds that were released by the State
treasury, more than half the corresponding State share was not received by the SHS within
the financial year. Besides, bulk of the State share (about 56 per cent) was received by SHS
only in the last month of the financial year. This has severely reduced the timely
availability of funds to implementing agencies. The situation is worse if one considers the
fact that about a quarter of NHM funds received in State treasury of Maharashtra from GoI
were not released to SHS within that financial year, which implies that the contribution of
State was even lower.9 Besides, as in Bihar, no funds sanctioned since December 2016 for
Maharashtra could be credited to the SHS account before March 2017 (Table 6). In 2015-
16, it was worse; nearly a third of the funds released to SHS in Maharashtra were credited
only in March 2016 (Table 6).
9
Notably, till 2015-16, the process for release of NHM funds was even lengthier. The request for release
used to be processed by 13 different units within the Health Department as the NHM budget is spread
out over 13 different budget heads in the State budget. Besides, the Planning Department was also
involved in processing the file (in addition to Finance and Health Department). Since 2016-17, the pro-
cess has been relatively simplified. The file for release is now processed only by the Health and the
Finance Department and request for all programmes are processed by a single section within the Health
Department. Despite the simplification, the process remains cumbersome.

Table 3: Number of days taken to credit Central Share in SHS account of Bihar
Number Between issue of SO by GoI and receipt of funds in State treasury Between receipt of funds in State treasury and credit to SHS
of days Account*
Amount credited Distribution (per cent) Average no. of days Amount credited Distribution (per cent) Average no. of days
(Rs. Crore) (Rs. Crore)

2016-17
0-7 658.2 85.6 5 - -
8-15 111 14.4 12 0.2 0.02 13
16-30 0.2 0.02 * - -
31-90 121.4 15.8 72
90+ 647.8 84.2 113
Total 769.4 100 769.4 100
2015-16
0-7 635.1 82.2 4
8-15 127.6 16.5 12 5.2 0.7 9
16-30 10.3 1.3 * 127.4 16.5 21
31-90 398.6 51.6 65
90+ 241.9 31.3 154
Total 773.1 100 773.1 100
Source: The data on the date of receipt of funds in the State treasury are sourced from Finance Department, Bihar. Data on the date of credit of funds to SHS account and date of
Sanction Orders (SO) are collected from SHS, Bihar. The dates of SO were also cross-checked with list of SO provided by the Ministry of Health and Family Welfare.
*In 2015-16, Rs. 20.37 Crore received in the State treasury could not be credited to the bank account of SHS by the end of the financial year. It was adjusted in the next financial
year. GoI refers to Government of India.

Table 4: Number of days taken to credit Central Share in SHS account of Maharashtra
Number of Between issue of SO by GoI and receipt of funds in State Between receipt of funds in State treasury and credit to SHS
days treasury Account*
Amount credited Distribution (per cent) Avg. no. of days Amount credited Distribution (per cent) Avg. no. of days
(Rs. Crore) (Rs. Crore)
2016-17
0-7 615.6 88.6 5
8-15 76.1 11.0 12
16-30 2.8 0.4 27 2.8 0.4 30
31-90 595.2 85.7 56
90+ 96.5 13.9 148
Total 694.5 100 694.5 100
2015-16
0-7 756.1 99.4 2
8-15
16-30
31-90 4.8 0.6 50 658.8 86.6 57
90+ 102.1 13.4 152
Total 760.9 100 760.9 100
Source: The data on the date of receipt of funds in the State treasury are sourced from Finance Department, Maharashtra. Data on the date of credit of funds to SHS
account and date of SO are collected from SHS, Maharashtra. The dates of SO were also cross-checked with list of SO provided by the Ministry of Health and Family
Welfare.
Note: *In 2015-16, Rs. 59.75 Crore received in the State treasury could not be credited to the bank account of SHS by the end of the financial year. It was adjusted in
the next financial year. In 2016-17, the amount was about Rs. 242.4 Crore.

Table 5: Receipt of different instalments released by GoI during the years 2015-16 and 2016-17 in Bihar
Release Towards Date of Sanction Order (SO) Date of receipt in SHS Ac Share of total receipts from
GoI (per cent)
2016-17
NRHM-RCH Flexible Pool 2nd Sept, 2016 26th Dec, 2016 78.9
RNTCP 7th Nov 2016 31st Mar, 2017 2.8
IDSP 29th Nov, 2016 31st Mar, 2017 0.3
NVBDCP 9th Dec, 2016 31st Mar, 2017 2.3
NRHM-RCH Flexible Pool 13th Jan, 2017 31st Mar, 2017 15.8
Total 100
2015-16
11th Sep, 2015 48.6
NRHM-RCH Flexible Pool 24th June, 2015 29th Dec, 2015 3.8
25th Jan, 2016 22.4
11th Sep, 2015 1.8
RNTCP 29th June, 2015
25th Jan, 2016 1.0
NUHM 8th July, 2015 15th Dec, 2015 2.1
NVBDCP and Flexible Pool for NCDs 30th Sep, 2015 16th Feb, 2016 2.0
NPCDCS 21st Oct, 2015 31st Mar, 2016 0.05
IDSP 9th Dec, 2015 16th Feb, 2016 0.2
NVBDCP 15th Dec, 2015 18th Mar, 2016 0.6
NVBDCP 11th Feb, 2016 19th Mar, 2016 1.6
NVBDCP 24th Feb, 2016 31st Mar, 2016 15
NRHM-RCH Flexible Pool 29th Feb, 2016 31st Mar, 2016 0.9
Flexible Pool for NCDs 25th Feb, 2016
Not received@
NLEP 22nd Mar 2016
Total 100
Source: State Health Society, Bihar @ Some of the funds credited to the State treasury could not be credited in SHS bank account within the financial year. It
was adjusted in the next financial year.

Table 6: Receipt of different instalments released by GoI during the years 2015-16 and
2016-17 in Maharashtra
Release Towards Date of Sanction Date of receipt in Share of total

Order (SO) SHS Ac receipts from GoI
(per cent)
2016-17
21st Sep, 2016 29th Oct, 2016 68.4
NRHM-RCH Flexible Pool
21st Sep, 2016 9th Dec, 2016 7.1
Flexible Pool for NCDs 30th Sep, 2016 24th April, 2017 3.7
1st Feb., 2017 6.2
RNTCP 11th Nov, 2016
2nd Mar, 2017 0.6
26th April, 2017 0.7
NVBDCP 9th Dec, 2016
24th April, 2017 0.1
20th April, 2017 1.9
NUHM 26th Dec, 2016
24th April, 2017 6.9
IDSP 19th Jan., 2017 24th April, 2017 0.3
NRHM-RCH Flexible Pool 28th Feb., 2017 24th April, 2017 4.1
Total 100
2015-16
20th Oct, 2015 52.1
NRHM-RCH Flexible Pool 15th Sep, 2015 5th Dec, 2015 6.2
28th Dec, 2015 7.8
28th Dec, 2015 1.5
RNTCP 29th Sep, 2015
29th April, 2016 2.3
29th Feb., 2016 2.5
Flexible Pool for NCDs 30th Sep, 2015 11th Mar, 2016 0.4
29th April, 2016 0.3
NVBDCP 8th Oct., 2015 29th Feb., 2016 0.5
11th Mar, 2016 0.1
29th April, 2016 0.1
29th Feb., 2016 0.3
NLEP 7th Dec, 2015 11th Mar, 2016 0.04
29th April, 2016 0.03
NCD 25th Feb., 2016 29th April, 2016 0.5
31st Mar, 2016 23.2
NRHM-RCH Flexible Pool 26th Feb., 2016
29th April, 2016 2.4
Total 100
Source: State Health Society, Maharashtra

@ Some of the funds credited to the State treasury could not be credited in SHS bank account within the
financial year. It was adjusted in the next financial year.
Unlike Bihar and Maharashtra, the time taken for release of funds from State treasury to
SHS account in Odisha was much lower. In 2016-17, about 94 per cent of all funds received by SHS
were credited in less than a month’s time (Table 7). In 2015-16, this proportion was around 84
per cent (Table 7). Importantly, more than 90 per cent of the funds received by SHS in 2016-17,

and 85 per cent in 2015-16 were credited to the bank account of SHS by end of December in that
financial year (Table 8).
Table 7: Number of days taken to credit Central Share in SHS account of Odisha
Number Between issue of SO by GoI and receipt of Between receipt of funds in State
of days funds in State treasury treasury and credit to SHS Account*
Amount Distribution Average Amount Distribution Average

credited (per cent) no. of credited (per cent) no. of
(Rs. Crore) days (Rs. Crore) days
2016-17
0-7 445.3 85.2 4 14.8 2.8 0*
8-15 66.4 12.7 9 71.0 13.6 12
16-30 10.6 2.0 64 406.6 77.9 23
31-90 29.8 5.7 38
90+
Total 522.2 100 522.2 100
2015-16
0-7 446.4 97.1 3 66.9 14.6 3
8-15 6.3 1.4 12 8
16-30 7.0 1.5 22 318.9 69.4 22
31-90 17.5 3.8 66
90+ 56.4 12.3 98
Total 459.7 100 459.7 100
Source: The data on the date of receipt of funds in the State treasury are sourced from Finance Department,
Odisha. Data on the date of credit of funds to SHS account and date of SO are collected from SHS, Odisha.
The dates of SO were also cross-checked with list of SO provided by the Ministry of Health and Family
Welfare. Note: *In 2015-16, Rs. 11.21 Crore received in the State treasury could not be credited to the bank
account of SHS by the end of the financial year. It was adjusted in the next financial year. In 2016-17, the
amount was about Rs. 0.14 Crore.

Table 8: Receipt of different instalments released by GoI during the years 2015-16 and
2016-17 in Odisha
Release Towards Date of Sanction Order Date of receipt in Share of total

SHS Account receipts from
GoI (per cent)
2016-17
NRHM-RCH Flexible Pool 2nd June, 2016 27th June, 2016 61.6
NVBDCP 22nd June, 2016 27th June, 2016 10.0
RNTCP 29th June, 2016 27th July, 2016 1.6
NUHM 9th Sep, 2016 8th Nov, 2016 1.7
NLEP 10th Oct, 2016 3rd Feb, 2017 0.4
NUHM 5th Dec, 2016 29th Dec, 2016 0.8
Flexible Pool for NCDs 8th Dec, 2016 3rd Feb, 2017 1.9
NRHM-RCH Flexible Pool 9th Dec, 2016 29th Dec, 2016 12.4
Flexible Pool for NCDs 20th Jan, 2017 28th Feb, 2017 1.9
NUHM 31st Jan, 2017 28th Feb, 2017 0.8
NRHM-RCH Flexible Pool 8th Feb, 2017 4th Mar, 2017 2.2
IDSP 23rd Feb, 2017 27th Mar, 2017 0.3
RNTCP 28th Feb, 2017 27th Mar, 2017 1.6
NVBDCP 29th Mar, 2017 31st mar 2017 2.8
NLEP 23rd Mar 2017 Not Received@
Total 100
2015-16
NRHM-RCH Flexible Pool 9th June, 2015 27th June, 2015 64.8
RNTCP/IDSP 29th June, 2015 27th July, 2015 3.0
NVBDCP 6th July, 2015 19th Aug 2015 1.5
NLEP 31st July, 2015 8th Oct 2015 0.2
Flexible Pool for NCDs 30th Sep 2015 4th Nov 2015 2.3
NRHM-RCH Flexible Pool 17th Dec 2015 23rd Dec 2015 14.6
NRHM-RCH Flexible Pool 17th Dec 2015 29th Mar 2016 7.0
NUHM 22nd Dec 2015 29th Mar 2016 5.3
NVBDCP 28th Dec 2015 29th Mar 2016 0.8
IDSP 31st Dec 2015 29th Mar 2016 0.4
NVBDCP 15th Dec 2015/30th Mar
2016
Flexible Pool for NCDs 25th Feb 2015 Not received@
NLEP 31st Dec 2015/22nd Mar
2016
Total 100
Source: State Health Society, Odisha
@ Some of the funds credited to the State treasury could not be credited in SHS bank account within the
financial year. It was adjusted in the next financial year.

5. Institutional Features Affecting Timeliness
The procedures for fund release from the State treasury to SHS in Bihar and Maharashtra
are unduly lengthy (Figure 1, Figure 2 and Figure 3). As indicated in the figure, there are a
minimum of 32 desks in Bihar and 25 desks in Maharashtra (in contrast to 10 in Odisha) through
which the paper file for release has to pass through before funds can be released to SHS. Bulk of
the movement of file over multiple desks is up and down the hierarchical State administrative set
up for issuing SO [the approval letters] by State Governments for releasing funds to SHS.
In Bihar, specific structures for fund flows have complicated the process. Unlike Odisha and
Maharashtra, there is an additional layer through which funds are channelled in Bihar. Funds
received in the Consolidated Fund of Bihar (State treasury) are first transferred to a Personal
Ledger Account (PL account) before being credited to the bank account of the SHS. PL account is
an account of the SHS within the State treasury, which is used for depositing funds received by the
State Government for transfer to the SHS. Till recently, as per the notification of the Finance
Department, only 20 per cent of the funds deposited in the PL account could be withdrawn by SHS
at a time.10 Although the restriction on the upper limit of withdrawal of funds from PL account
was waived by FD for every instalment, and was not implemented in practice, the need for special
request for waiver in each instalment lengthened the process of withdrawal of funds.11 Besides,
unlike most other States, every instalment of release of funds to SHS in Bihar requires the approval
of the Minister of Health, which further lengthens the process.
10
In 2015-16, with special request from the Principal Secretary (Health), the Finance Department, allowed SHS
to withdraw significantly larger proportions of funds from the PL account for each instalment. Similarly, in 2016-
17, the Finance Department had allowed 100 per cent withdrawal of each instalment under special request from
the Principal Secretary (Health). An examination of the receipts and payments from the PL account (information
provided by the Finance Department), shows that all funds deposited in the PL account in 2015-16 and 2016-17
were withdrawn by SHS.
11
As per the Finance Department, the creation of an additional account was required to deal with issues related
to utilisation of NHM funds and their documentation by SHS.

Figure 1: Process for release of NHM funds from State treasury to State Health Society in Bihar
Draft requisition letter prepared by 1

accountants and forwarded to .
State Health Society On receipt of

(SHS) Sanction Order State Finance Manager, NHM 2 Requisi-
from GoI, SHS . tion let-
prepares requisi- ter
tion letter for re- Addl. Director (Finance)/ Addi- 3 signed
lease tional Executive Director . by
ED/MD
PART I for sub-
Executive/Mission Director (ED/MD) 4
mission
.
to Health
Dept. Bi-
---------------------------------------------------------------- ---------------------------------------- har
15
. 5 6 Under Secretary/ Sec-
After approval, Dy. Secretary .
file sent back . Officer
tion
13 7 14
for preparation . .
of Sanction Or- .
Health Department Jt. Secretary (JS) Forwarded
der (SO) and 12 8
Bihar for
Allotment Or- . . approval of
der (AO)
11 release of 16,
Principal Secretary (PS)
. 9 funds 17
.
Minister of Health Forwarded to JS twice: first
PART II for signing SO and then for
10 signing AO in consultation
. with Finance Dept.
State Health
18
Society (SHS) .
Along with SO and AO, SHS submits pre-receipt to Accounts sec-
tion/DDO in DHS for preparation of bills
Submission of bills by
Dir. of Health 19, 20, 21 DDO to State Treasury
Services (DHS)
State Health 24
PART III Process for Society (SHS)
withdrawal of
funds from PL
State Treasury 22 Account (if
more than 20 % PS (Health) 25
of the amount
31
has to be with-
drawn PS (Finance) 26
PL Account of State 30
Health Society 23
Through Demand Draft
29 JS (Finance) 27
PART IV
PART III Under Secretary/ Section officer (Finance)
Bank Account of State
Health Society (SHS) 32 28

Figure 2: Process for release of NHM funds from State treasury to State Health Society Maharashtra
1
.
Draft requisition letter prepared by Budget and
Finance Officer and forwarded to
On receipt of
State Health State Finance Manager, NHM 2 Requisition
Sanction Order
Society (SHS) . letter signed
Maharashtra
from GoI, SHS
by MD, NHM
prepares requi- Director (Finance and Accounts) 3 for submis-
sition letter for . sion to Pub-
release lic Health
Dept. Maha-
Mission Director (MD), NHM 4 rashtra
PART I .
15 4 16
.
Under Secretary (PHD) Under Secretary
Public Health De- For issue of 5
(Budget)
partment (PHD) Government 11 .
Maharashtra Resolution
(SHS) (G.R.)
Deputy Secretary (PHD) 12 Dy. Secretary 6
(Budget) .
10
13 Joint Secretary (Budget) 7
.
Finance Department, Additional Chief Secretary (PHD)

Maharashtra
9 8 14
. .
17 After issue of G.R. by
PHD, budget is
PART II Joint Director (Finance and Admin), Pune released to DHS on
Budget Distribution
System (BDS) Portal
State Health So- 18
ciety (SHS)
Budget and Finance Officer submits G.R. along with UC to
DHS/DDO for preparation of bills
Dir. of Health Release of State Share Corresponding to

Services (DHS) 19, 20, 21, 22 Central releases under Tribal sub-plan
 Funds are not released to State Health and
Submission of bills by Family Welfare Society
DDO to State Treasury
 Funds are released directly by Tribal Devel-
State Treasury 23 opment Department to Zilla Parishads (ZPs)
Transferred through RTGS at the district-level.
PART III  District Health and Family Welfare Society

follows up with ZPs for release of State share.
Bank Account of
Health Society (SHS) 25
DDO in DHS
24

Figure 3: Process for release of NHM funds from State treasury to State Health and Family Welfare
Society in Odisha
On receipt of State Finance Manager, NHM 1

State Health and Sanction Order .
Family Welfare from GoI, SHS
Society (SHS) prepares requisi-
tion letter for re- Addl. Director (Finance), NHM 2
lease .
PART I
----------------------------------------------------------------------------------------------------------------------
3 5 4
Preparation .
of Sanction . .
Financial Advisor (FA)-cum- Additional Financial
Department of Health Order (SO)
Joint Secretary Advisor (AFA)-cum-Under
and Family Welfare and submis- Secretary / Section Officer
Odisha sion to
Health Sec-
retary for
Approval Sanction order prepared
Secretary, Health GoO 6 in consultation with Fi-
PART II A. nance Department
.
-------------------------------------------------------------------------- -----------------------------------------------
Preparation
Director of Health Services and
PART III 7, 8
submission of
bills by
DDO/DHS to
Directorate of Health State
Services (DHS) Odisha Treasury
9 State Treasury
.
E-transfer

10 Health and Family Wel-
fare Society (SHS)

In Maharashtra, there is also a separation of the procedures for releasing the GoI and State
share of NHM funds, which makes the overall process cumbersome. In Bihar and Odisha, for every
instalment, the requisition letter sent by SHS to the Health Department (HD) includes the claim
for corresponding State share against each instalment from the Centre. These letters are also
processed in those States taking into account the combined claim by SHS for the Central and the
State share. In contrast, in Maharashtra, due to apprehensions about releases, it has been a
practice of the SHS to claim the State share only after the GoI share is credited to its bank account.
This increases the number of iterations required for the release of funds, and results in an
inordinate delay or non-receipt of funds (a lag of 4 to 5 months) after the GoI release.
Further in Maharashtra, funds are released to multiple agencies for different parts of the
program. The State share towards NHM under tribal-sub-plan is treated differently and released
directly by the Tribal Development Department to Zilla Parishads (ZP), the district government,
unlike other grants, which are released to SHS. The requisition for release of the State share under
tribal sub-plan is therefore submitted and followed up by each District Health Society to the Chief
Executive Officer (CEO) of the ZP in the respective district. This adds to the complications in the
process of release of NHM funds.
In contrast, in Odisha, certain institutional arrangements help to simplify the process and
reduce the number of desks through which the file has to pass through for releasing funds to SHS.
First, the placement of a ‘Financial Advisor’ (FA), an employee of the Finance Department (FD)
within the Health Department prevents the need for the file (with requisition for release) to move
to the FD for approval. The ‘FA’ in the Health Department clears issues with the FD without having
the file to move to FD. This speeds up the process. Secondly, unlike Bihar and Maharashtra, the file
does not move back and forth in the chain of hierarchy within the Health Department. On receipt
of requisition from the SHS, the FA checks with the FD and sends the file to the relevant section in
the Health Department for preparation of the SO. The draft SO is then forwarded to the Secretary
of the Health Department for approval, from where it is passed on to the DHS for preparation and
submission of bills by the DDO. In other words, the file with the requisition from SHS is moved up
only once after clearance by FA and preparation of SO by the relevant section in the Health
Department. Thirdly, the draft SO prepared by the relevant section is sent directly by the FA to the
secretary, and does not pass through the entire hierarchy within the Health Department. This is
in contrast to Bihar and Maharashtra wherein the file with the requisition passes through various
desks up and down the hierarchy within the Health Department.
6. Other Rigidities in the Financial Architecture
Structuring of NHM budget into more than a 1000 budget lines, and limited flexibility in the
use of funds across different flexible pools poses a hurdle in utilisation. Even within the same
‘Flexible pool’, budgets are often strictly segregated. Under the flexible pool for communicable
diseases, funds for disease control programs like the Revised National Tuberculosis Control
Programme (RNTCP), National Vector Borne Disease Control Programme (NVBDCP) and National
Leprosy Eradication Programme (NLEP) are earmarked and approved for release by separate
divisions within the Health Ministry and released separately. With separate budgets, releases and
requirement of maintenance of accounts for individual disease control programmes, limited
flexibility in using budgets across different heads exist even within the same pool.

The segregation of funds within the NHM budget and the requirement of separate financial
reporting for each programme have complicated the implementing structure resulting in reduced
transparency in utilization of funds. The reduced transparency has resulted into delays in fund
releases in States like Bihar. A typical example of this is the existence of multiple bank accounts in
implementing agencies which cater to different programmes under the scheme. Data provided by
SHS in Odisha and Maharashtra suggest that the main (group) bank account of SHS is further
subdivided into 8 to 9 sub-accounts to ensure segregation of funds under different programs.
Releases to District Health Societies are made separately from each of these bank accounts.
Similarly, multiple bank accounts exist at the level of districts and blocks, and funds are released
from each of these accounts to implementing agencies at the lower level or to health facilities. The
network of bank accounts and releases from each account at different levels for expenditure on
different parts of the programme reduces transparency in accounting.
The existence of SHS outside the administrative boundary of the State Governments has
further added complexities. Being outside the State administration, NHM Funds can be released
to SHS only in the form of Grants-in-aid (GIA), which in turn can be released only on issuance of a
SO by the State Government. GIA is a transfer of funds from the State Government to local
Governments or implementing agencies for the purpose of funding a specific program or project.
Much of the time consumption in the release process of States is in the issuance of SO. This is
unlike withdrawals within the State administration where the approval of the budget is adequate
to withdraw funds from the State treasury and no separate SO is required for release of funds. In
addition, NHM grants cannot be withdrawn directly by SHS from the State treasury as they are
not a part of the State administration. These are withdrawn by a Drawing and Disbursing Officer
(DDO) in the Health Department. 12 Even in a relatively better performing State like Odisha, a
significant number of days (nearly a week) are consumed in submission of bills even after the SO
is issued.
Utilisation can also be adversely affected by factors unrelated to the financial architecture.
Deficiencies of physical inputs (like lack of human resources) in State health systems pose major
constraints in utilising NHM funds. Many of the interventions under NHM assume the existence
of a certain set of complementary inputs in States, which are inadequate in many of the high-focus
States. Partially due to this, the utilisation of funds under the Mission flexible pool in better
performing States is higher than the poor performing States.
7. Upward and Downward Linkages in Fund Flows
It is important to recognise that releases to district-level implementing agencies are

affected by the delay in receipt of funds at SHS. In Bihar, around 78 per cent of all funds transferred
to districts under the RCH-Mission Flexible Pool in 2016-17, were released after the SHS received
the first instalment of funds at the end of December (Table 9). Bulk of the releases to districts
were made two days after the SHS received the first instalment of funds in December, thereby
indicating a strong association between receipt of funds in SHS account and release of funds to
district-level health societies. In Maharashtra too, about 63 per cent of all releases to districts in
2016-17 were made after funds were received by the SHS. More than a third of these were
12
DDOs are officers authorized by administrative departments with the concurrence of the Finance Department
along with the Auditor General (A.G.) to withdraw funds from the State treasury under various budget heads.

released after the receipt of first instalment of funds by the SHS (Table 9). In Odisha, the
association was even stronger. About 81 per cent of funds transferred to districts under the RCH-
Mission Flexible Pool were released after a day of receipt of funds in SHS account in that year
(Table 9).
Table 9: Association of releases to districts with receipt of funds at SHS
1st instalment received

In SHS 26th Dec
Bihar Date of release to districts (78 % of all releases after receipt of 28th Dec
first instalment at SHS)
In SHS 29th Oct
Maharashtra Date of release to districts (63 % of all releases after receipt of 10th Nov
In SHS 27th June
Odisha Date of release to districts (81 % of all releases after receipt of 28th June
Notably, part of the delay in crediting funds to SHS account in Bihar and Maharashtra is
on account of delay in approval and release of funds from GoI. In 2016-17, in both the States, the
first SO, which is the administrative approval for release, was issued in the month of September,
nearly 6 months since the beginning of the financial year. In Bihar, part of this was due to a delay
in finalization of the Program Implementation Plan (PIP), the initial state plan for NHM, and the
approval of the NHM budget of that year. In Maharashtra however, although the NHM budget was
approved in June, the issuance of SO for the first instalment was delayed due to the State’s inability
to meet various conditions required for the release of funds in that instalment. Notably, in most
major States, the NHM budget was not approved before June, the end of the first quarter in the
financial year.
8. Summary
This study highlights the role of institutional processes in effective use of budgeted
resources. It takes up the case of the National Health Mission (NHM) in India, and documents the
utilisation levels across 29 States and their association with the volume and timeliness of fund
releases from State treasuries in the three States of Bihar, Maharashtra and Odisha.
The analysis suggests that on average, about 45 per cent of the funds allocated to NHM
remained unutilised across States in 2015-16 and 2016-17. The problem of low utilisation is
further compounded by a disproportionately high share of expenditure in the last quarter of the
financial year. In Bihar and Maharashtra, the low utilisation was associated with a delay of about
2-3 months in release of funds from State treasuries. This can be partially attributed to the
complex States’ administrative procedures for fund releases. The file with the request for release
of funds has to pass through a minimum of 32 and 25 desks up and down the administrative
hierarchy in Bihar and Maharashtra. In contrast, in Odisha, the process of fund release was
relatively simpler, and correspondingly, the time consumed in release of funds to implementing
agencies was shorter.

The complex procedures for release of funds partially arise from the fact that the State-level
implementing agency (SHS) is outside the administrative structure of the State Governments.
Unlike withdrawals within State Governments, releases of funds to SHS require a separate
Sanction order from the Government, which lengthens the time taken for release of funds. In
addition, segregation of NHM budgets into multiple heads and complicated accounting
procedures have reduced transparency in fund utilisation of NHM. This has led to creation of
additional checks and balances in the fund release process in Bihar. Further, fragmented
procedures and non-release of GoI funds received by the Maharashtra State treasury have reduced
the volume of fund flows to implementing agencies.

References
Barker, C. et al. 2014. Effectiveness of Fund Allocation and Spending for the National Rural Health
Mission in Uttarakhand, India: Block and Facility Report. Washington, DC: Futures Group,
Health Policy Project, March 2014.
Barroy, H. et al. 2016. Assessing Fiscal Space for Health expansion in Low and Middle Income
Countries: A Review of the Evidence, Health Financing Working Paper No.3, World Health
Organization.
Bhanumurthy N.R., et al. 2014. Unspent Balances and Fund Flow Mechanism under Mahatma
Gandhi National Rural Employment Guarantee Scheme (MGNREGS), National Institute of
Public Finance and Policy, New Delhi. Available at http://www.nipfp.org.in/book/996/
Blanchet, N. J., Fink, G., and Osei-Akoto, I. 2012. The effect of Ghana’s National Health Insurance
Scheme on health care utilisation, Ghana Medical Journal, 46(2): 76-84.
Cashin C. et al. 2017. Aligning Public Financial Management and Health Financing: Sustaining
Progress Toward Universal Health Coverage, Health Financing Working Paper No.4, World
Health Organization. Available at:
http://apps.who.int/iris/bitstream/10665/254680/1/9789241512039-eng.pdf
Choudhury M. et al. 2013. Selected Aspects of NRHM Expenditure at the State-level: A Focus on
Rajasthan and Karnataka, National Institute of Public Finance and Policy, April 2013.
Gayithri, K. 2012. District Level NRHM Funds Flow and Expenditure: Sub National Evidence from
the State of Karnataka, Working Paper No. 278, Institute for Social and Economic Change,
Bangalore.
Gupta M., et al. 2011. Improving Effectiveness and Utilisation of Funds for Selected Schemes
through Suitable Changes in Timing and Pattern of Releases by the Centre, National
Institute of Public Finance and Policy, New Delhi.
Hart, T. 2017. Public financial management and health service delivery: Nepal case study, London:
Overseas Development Institute.
Schieber, G. et al. 2012. Health financing in Ghana, World Bank Publications, Washington, DC.
Welham B. et. al. 2017. Public Financial Management and Health Service Delivery: Necessary, but
not Sufficient Report of the Overseas Development Institute, April 2017. Available at:
https://www.odi.org/sites/odi.org.uk/files/resource-documents/11462.pdf

Appendix: Features of Fund Flows to State-level Implementing Agencies
Appendix Figure 1: Flow of Funds to State Health Societies under

the National Health Mission
Processed by the Ministry of Health

Consolidated Fund of In-
Level 1 and Family Welfare and
dia
Released to State Treasury through
the Reserve Bank of India (RBI)
Consolidated Fund of the
Level 2 State
Bank Account of State Processed by the Health Department and

Level 3 Health Society released to SHS through a DDO* of the
State Health Department
Releases from the Consolidated Fund of India: Releases from the Consolidated Fund
of India are processed by the Ministry of Health and Family Welfare. The process for
release begins with the issuance of SO for specific programmes. Bulk of the SO is issued in
two instalments in each programme.13 For the first instalment (which is usually the largest
amount released in the financial year), the SO is processed only if two conditions are met
by States (i) have submitted the FMR and the provisional fund utilization certificate (UC)
for the previous financial year, and (ii) have contributed the required State share in the
previous financial year and there are no arrears on this account. For the second
instalment, SOs are issued if States submit (i) audited UC and audit report of the previous
year, and (ii) FMR for the previous quarter.14 For each instalment, the issuance of a SO is
followed by an advice to the Reserve Bank of India (RBI) for credit of funds to the
respective State accounts. On receipt of this advice, RBI informs the FD of the respective
States about the credit of NHM funds.
Releases from the Consolidated Fund of the State: NHM Funds are released to SHS from
the State budget in the form of Grant-in-aid (GIA). For releases of GIA, a SO has to be issued
by the State Government, following which, a Drawing and Disbursing Officer (DDO) in the
Health Department withdraws funds from the State treasury and releases it to SHS.
13
Infrastructure maintenance and kind grants are exceptions to this rule.
14
Interestingly, SO are issued by multiple units within MoHFW. For National Urban Health Mission
(NUHM) and Disease Control Programmes for Communicable Diseases like the Revised Tuberculosis
Control Programme (RNTCP), National Leprosy Eradication Programme (NLEP) and National Vector
Borne Disease Control Programme (NVBDCP), sanction orders are issued by the individual disease con-
trol divisions, while for the remaining components of NHM, Sanction Orders are issued by the NHM
(Finance) division within MoHFW.

The SHS initiates the process for the issuance of SO. On receipt of information on GoI SO,
SHS submits a request to the Health Department for release of NHM funds.15 Following the
request from SHS, the Health Department of each State processes the file (in consultation
with the FD) and issues the SO for release. The DDO in the Health Department of the
respective States who has been delegated the responsibility of withdrawing funds on
behalf of SHS then prepares the necessary bills and submits to the State treasury for
release. The treasury in turn credits the requested amount to the bank account of SHS by
way of e-transfer (as in Odisha and Maharashtra), or issues a Demand Draft in favour of
the SHS (as in Bihar).
15 The Department of Health and Family Welfare here refers to the Health Department in Bihar and
the Public Health Department in Maharashtra.

MORE IN THE SERIES
 Rai, S., Muttreja, D., Banerjee, S., Mita Choudhury, is Associate Professor,
and Mishra, M. (2018). The NIPFP
Economics of Releasing the V-band Email: [email protected]
and E-band Spectrum in India, WP
No. 226 (April). Ranjan Kumar Mohanty, is Economist,
NIPFP
 Mohanty, R. K., and Bhanumurthy, Email: ranjan.mohanty@ nipfp.org.in
N. R. (2018). Assessing Public Ex-
penditure Efficiency in Indian
States, WP No. 225 (March).
 Chakraborty L., Ingrams, M., and

Singh Y. (2018). Fiscal Policy Effec-
tiveness and Inequality: Efficacy of
Gender Budgeting in Asia Pacific,
WP No. 224 (March).
National Institute of Public Finance and Policy,

18/2, Satsang Vihar Marg,
Special Institutional Area (Near JNU),
New Delhi 110067
Tel. No. 26569303, 26569780, 26569784
Fax: 91-11-26852548
www.nipfp.org.in

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NIPFP Working paper series

Utilisation, Fund Flows and Public Financial

National Institute of Public Finance and Policy

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 0

Utilisation, Fund Flows and Public Financial Management under the

Mita Choudhury1 and Ranjan Kumar Mohanty2,3

Accessed at http:// http://www.nipfp.org.in/publications/working-papers/1820/ Page 1

In a federal structure of Government, public funds have to flow through multiple

Execution of health budgets in developing countries has received considerable

In India, preliminary studies on selected schemes initiated by the National

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 2

2. Data and Methodology

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 3

3. Utilisation of Funds under the National Health Mission

The overall utilisation ratios are affected by systematic differences in utilisation

The problem of low utilisation is further compounded by a disproportionately high

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 4

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 5

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 6

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 7

4. Timeliness of Fund Flows in the Selected States

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 8

(Rs. Crore) (Rs. Crore)

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 9

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 10

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 11

Release Towards Date of Sanction Date of receipt in Share of total

Source: State Health Society, Maharashtra

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 12

Amount Distribution Average Amount Distribution Average

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 13

Release Towards Date of Sanction Order Date of receipt in Share of total

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 14

5. Institutional Features Affecting Timeliness

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 15

Draft requisition letter prepared by 1

State Health Society On receipt of

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 16

Finance Department, Additional Chief Secretary (PHD)

Dir. of Health Release of State Share Corresponding to

PART III  District Health and Family Welfare Society

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 17

On receipt of State Finance Manager, NHM 1

Bank Account of State

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 18

6. Other Rigidities in the Financial Architecture

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 19

7. Upward and Downward Linkages in Fund Flows

It is important to recognise that releases to district-level implementing agencies are

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 20

Table 9: Association of releases to districts with receipt of funds at SHS

1st instalment received

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Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 22

Accessed at http://www.nipfp.org.in/publications/working-papers/1820/ Page 23

Appendix: Features of Fund Flows to State-level Implementing Agencies

Appendix Figure 1: Flow of Funds to State Health Societies under

Processed by the Ministry of Health

Bank Account of State Processed by the Health Department and