Arjun wants fiscal target junked

Supports Plan panel against finance minister, who wants to stick to the FRBM Act goals.

Human Resources Development Minister Arjun Singh has fired another salvo. In a set of suggestions to the Planning Commission, he has said the Fiscal Responsibility and Budget Management (FRBM) Act, 2004, is a drag on investment in poverty alleviation and agriculture and that "we need not be constrained" by it.

With this, Singh has opposed a key ally, Finance Minister P Chidambaram, who been stoutly opposing the Planning Commission's suggestion for extending the FRBM targets by two years.

Interestingly, Singh has based his argument on the national common minimum programme (NCMP).

Citing NCMP commitments, he says, "The draft approach paper needs to articulate NCMP commitments in a faithful, bold and time-bound manner. For example, it must state time-bound targets and strategy for achieving the goal of raising public expenditure on education to 6 per cent of the GDP and expanding the mid-day meals programme beyond the primary stage."

Though the Plan panel says the move will control the rising inflation and interest rates, the finance minister sees any shifting of the FRBM goalposts as populist and believes the government must curb fiscal profligacy. This is supported by the prime minister, who says it will compromise the government's credibility.

There is a frank realisation, something the prime minister has articulated before colleagues, that given the rising oil prices, steps like issuance of oil bonds are just a way of sweeping the reality of fiscal deficit under the carpet. "Even if the numbers look good, nobody should be fooled even for a minute," said a minister.

Political pundits say Singh may be opening one more front against the government by suggesting that it is less loyal to the NCMP than to mere technicalities.

Though no other minister has reacted so far, Ahluwalia today said he was keen on getting more money for the next Plan rather than tightening the belt to meet the fiscal targets.

"We really do not care for the FRBM targets so long as we get the money," Ahluwalia said, responding to a finance minister's letter against shifting of the fiscal targets.