Deficit to be kept in check: Montek

Planning Commission Deputy Chairman Montek Singh Ahluwalia today said the government hoped to rein in the fiscal deficit at the projected level of 4.4 per cent of the gross domestic product (GDP) during 2004-05 despite the allocation of an additional Rs 2,000 crore to focus sectors identified in the National Common Minimum Programme (NCMP).

The Centre is banking on the savings made under some Budget heads to compensate for the Rs 12,000 crore allocated to NCMP-related areas.

"The additional allocations reflect the importance of items in the NCMP," Ahluwalia told reporters after the full Planning Commission meeting.

Experience suggested that accelerated growth was not possible without accelerating investment in the economy, Ahluwalia added.

The approach paper to the Tenth Plan had said despite modest levels of investment, it would be possible to accelerate GDP growth, however, the low growth (at a little over 6 per cent) in the first two years of the Plan period was way below anticipated levels.

The commission would review the plan to achieve the NCMP objectives given the resource constraints faced by the government.

The role of tax reforms in increasing the tax-revenue ratio of states would be discussed with the finance ministry, Ahluwalia added.

The two bodies would work together on the estimation of macro-economic forecasts, like GDP growth, revenue and non-Plan expenditure growth so that the projection of the expected level of gross budgetary support was based on a consistent set of estimates.