Economy

Plan panel pitches for higher budgetary support

G. Srinivasan New Delhi | Updated on February 01, 2011 Published on January 28, 2011




In the run-up to the Union Budget 2011-12, the Planning Commission has been haggling over higher gross budgetary support.

It is the final year of the Eleventh Plan (200712) when additional support is required to meet the 11{+t}{+h} Plan commitments on key programmes and schemes close to the Government.

Sources in the Government told Business Line here that even as the Plan panel has plumped for a 20 per cent increase in gross budgetary support for the annual Plan of the next fiscal, the track record in the fulfilment of the Plan programmes was none too encouraging.

This was mainly due to the higher subsidy outgo, expenditures related to the Sixth Pay Commission and the large fiscal stimulus in the latter half of 2008-09 which derailed the planners' hope of financing the Plan out of higher balance from current revenues (BCR, the resources from which is the primary source of non-debt funds).

Robust revenue collections

Even as the revenue collections became somewhat robust this fiscal following higher realisation of 3G spectrum allocation (a one-time bonanza) and disinvestment proceeds proceeding on targeted line, the flare-up in inflation particularly food inflation has upset the book-keepers' calculations in terms of sparing additional resources for financing existing programmes and schemes.

The sources said that against the original 11{+t}{+h} Plan target of Rs 14,21,711 crore (in constant prices), in the first four years of the current Plan, has received a total GBS of Rs 11,68,584 crore (in current prices).

In the face of the rising inflation in the economy in recent months, the resources required in real terms even from a 20 per cent hike in GBS would entail outgo of around Rs 4,47,000 crore, the sources said adding that in each component of the GBS viz., Central Assistance to States and Union Territories, other additional Central assistance and allocation to the Central Ministries (Central Plan — Centrally-sponsored scheme and Central sector Plan), there must perforce be a substantial hike.

The Central Assistance States & UTs, for instance, would have to be augmented from Rs 29,407 crore budgeted this fiscal to Rs 39,000 crore, representing some 34 per cent hike. But since 2010-11, revised estimates would be higher than budgeted, the increase for the next fiscal seems large.

In the case of other additional Central assistance, the sources explained, a 15 per cent hike from the budgeted Rs 63,085 crore this fiscal to next fiscal is proposed because some of the programmes and schemes being run under this rubric are “critical for inclusive growth”, the sheet-anchor of the UPA governing coalition's political plank.

Significant increases proposed include Rajeev Gandhi Grameen Vidyutikaran Yojana (RGGVY), Jawaharl Nehru National Urban Renewal Mission (JNNURM), Accelerated Irrigation Benefit Programme (AIBP) and Backward Region Grant Fund (BRGF).

Similarly in the category of other additional Central assistance and allocation to the Central Ministries, the Plan panel makes a compelling case for a large increase in the allocation of health and education and in the case of the Department of Road Transport and Highways and in the Ministry of Railways as these are critical infrastructural areas which continue to exert a binding constraint in terms of reducing the high-cost of the economy.

Final meeting

Even as there has been one-round of discussion between the Union Finance Minister, Mr Pranab Mukherjee, and the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, the sources said that one more final meeting would take place between them in the next week to determine the definitive quantum of GBS for the next annual Plan, before the bulky documents of budget go for printing in the Government press from the second week of February.

> geeyes@thehindu.co.in

Published on January 28, 2011
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