The Hindu Business Line : Central Plan outlay to go up 34%

New Delhi, July 6 The 2009-10 Union Budget proposes a 34 per cent increase in the Central Plan outlay to Rs 3.25 lakh crore, against Rs 2.43 lakh crore (budgeted) in 2008-09.

However, if the budgeted Central Plan outlay for the current fiscal is compared with the revised outlay of Rs 2.82 lakh crore actually provided in 2008-09, the increase would only be 15 per cent.

The Finance Minister, Mr Pranab Mukherjee, said that against the backdrop of limited fiscal space because of reduction in Central Value Added Tax (Cenvat) and service tax rates, the Government has taken “a conscious and bold” decision to enhance the gross budgetary support for the annual Plan 2009-10 by Rs 40,000 crore over interim budget presented in February.

He said the bulk of this enhanced gross budgetary support is directed towards public investment in infrastructure with special emphasis on rural infrastructure, raising growth potential and leading to income generation.

Mr Mukherjee hoped that this fiscal expansion would go “a long way in reversing the impact of economic slowdown and accelerate our growth revival in the medium-term”.

FISCAL DEFICIT TARGET

Besides, he said, the State Governments will be permitted to borrow additional 0.5 per cent of their gross state domestic product (GSDP) by relaxing the fiscal deficit target under the Fiscal Responsibility and Budget Management (FRBM) norms from 3.5 per cent to 4 per cent of their GSDP. This would enable the State governments to raise additional open market loans of about Rs 21,000 crore in the current year.

Higher expenditure

Hence, the total addition in Plan expenditure by Centre and the States would be Rs 61,000 crore over interim budget, he added.

Among the major beneficiaries of the enhanced Central Plan outlay would be agriculture and allied sectors as its outlay would be up from Rs 9,969 crore (revised) in 2008-09 to Rs 10,629 crore this fiscal, while that for rural development has been increased from Rs 48,884 crore to Rs 51,769 crore.

The latter includes provision for rural housing but excludes provision for rural roads.

ENERGY AND TRANSPORT

Energy sector will get Rs 1.15 lakh crore (Rs 98,877 crore), while transport Rs 94,306 crore (Rs 78,269 crore), which covers rural roads.

However, outlays on communication will decrease from the revised Rs 20,237 crore in 2008-09 to Rs 16,731 crore. But science, technology and environment get a substantial jump from Rs 8,547 crore to Rs 11,207 crore.

In a statement outlining medium-term policy, issued with Budget documents, the Finance Minister maintained that the increase in Plan expenditure is primarily accounted for by higher allocations to the social sector along with urban and rural infrastructure.

Despite decline in revenue and higher liabilities on specific components of non-Plan expenditure including salary commitments, interest obligations, subsidy, Defence establishments and capital acquisitions, internal security and pensions, adequate provisions have been ensured for important development schemes.