The Hindu Business Line : Plan panel pitches for higher gross budgetary support next fiscal

AS the Budget preparation for the next fiscal year is under way, the Planning Commission has plumped for a substantial increase in gross budgetary support (GBS) to the 2006-07 annual Plan to funnel funds to the flagship programmes and other priority areas dear to the United Progressive Alliance (UPA) government.

Sources in the Yojana Bhawan told Business Line that the Planning Commission has just wound up detailed discussions with Ministries/Departments at the Member level to zero in on the minimum inescapable allocations for annual Plan 2006-07, the final year of the Tenth Five-Year Plan (2002-07), as also the grant component of Central Assistance for States/Union Territories Plans.

Keeping in view the result of Member-level discussions with Central Ministries/Departments, suggestions of the Prime Minister concerning the priorities for annual Plan 2006-07, additional allocations required for flagship schemes/programmes of the Government as well as specific pleas for various components of Central Assistance to States/UT Plans, the detailed assessment undertaken by the Plan panel points to a minimum of Rs 1,83,000 crore as GBS for annual Plan 2006-07, against the Finance Ministry's suggestion of Rs 1,77,000 crore.

The sources said that out of Rs 1,83,000 crore by way of GBS mentioned by the Plan panel, the grant component of Central Assistance to Plans of States/UTs would be Rs 44,726 crore, which is more than 31 per cent over what was budgeted for 2005-06. They said that though this seems to be a considerable jump, much of it is inevitable since it emanates either out of misspecifications in 2005-06 (budget estimate - BE) or of binding commitments made by the Government during the course of the current fiscal.

Citing the case of misspecifications, the sources said the BE for 2005-06, for instance, was understated because provision was made only for 30 per cent of the requirement for urban renewal as grant with an undertaking that it would be converted to 100 per cent grant at the revised estimate stage. The Jawaharlal Nehru National Urban Mission has now been approved by the Union Cabinet as a 100 per cent grant scheme, which would lead to an increase of over Rs 4,800 crore as the grant component in BE 2006-07. A similar problem also surfaced in the case of accelerated irrigation benefit programme (AIBM), the sources noted.

Moreover, the Government has proposed considerable step-up in grant components of Central assistance in respect of Backward Area Development Programme, rehabilitation programme for tsunami-hit regions and literacy campaigns.

On the Central Plan, the sources said that there is a need to provide adequately to the flagship programme of the UPA government such as the National Rural Employment Guarantee Programme, Mid-Day Meal scheme etc., Besides, the high priority areas for the Government such as agriculture (including animal husbandry and water resources), infrastructure (road transport, shipping and railways) and secondary education also demand substantial infusion of funds to sustain the scale and operation of these programmes for enabling larger sections of population to benefit.

Considering the importance of grant and Central Plan assistance and the fact that some of the flagship programmes are deficiently provided and new demands keep cropping up from ministries/departments, even this amount of Rs 1,83,000 crore by way of GBS might not be sufficient. It has indicated to the Finance Ministry that any reduction from this level would inevitably entail cuts that would have to be applied on the priority programmes, which could have adverse fallouts on the public perceptions concerning the commitment of the UPA Government to its development agenda. Hence, the sources said, the ball is now in the court of the Finance Ministry to bolster the Plan panel GBS numbers for the next fiscal as it is in the midst of drawing the blueprint of 2006-07 Union Budget.