Finance minister weighs higher Plan support

Consultations begin with ministries that are likely to be high spenders

The finance ministry is working out ways to make available an enhanced Gross Budgetary Support for Budget 2004-05, even though it has asked central ministries to keep the reshuffle of the Plan outlay within the resources already indicated in the interim Budget.

Officials told Business Standard the ministry had begun consultations with ministries such as agriculture, health and education, which are expected to be high spenders as per the Common Minimum Programme (CMP) of the United Progressive Allianwe government.

The CMP has stipulated that public spending on health will be raised to atleast 2-3 per cent of the gross domestic produce over the next five years. Similarly, public spending on education will also be increased to at least six per cent of the GDP.

In the pre-Budget meetings, ministries have been asked to finalise their allocations as per the sector-specific roadmap contained in the CMP.

Sources said the exercise was being undertaken in a manner to ensure that the allocation of additional funds and launch of new schemes as per the CMP could be done without a massive hike in the gross budgetary support.

The interim Budget, tabled by the previous government in February this year, had projected a gross budgetary support of Rs 1,35,071 crore for 2004-05.

It might be recalled that the Planning Commission had sought a gross budgetary support of nearly Rs 1,51,000 crore for the fiscal, but the finance ministry finalised a lower gross budgetary support on grounds of resource constraints.

Also, since the post of deputy chairman of the Planning Commission is still vaccant, it is likely that the finance ministry will finalise the amount on its own.

Conventionally, the gross budgetary support is finalised after meetings between the finance minister and the deputy chairman of the Plan panel.

Officials in the Planning Commission say an increase in the gross budgetary support in the forthcoming Budget is inevitable.

They said several new funds were sought to be created under the CMP, and at the same time it would be difficult to jettison the programmes already initiated.

The CMP has talked about the creation of a Backward State Grant Fund for states like Bihar, Assam and Uttar Pradesh, which "have recieved per capita allocation that are much below the national average in the 10th Five-Year Plan".

The gross budgetary support, projected in the interim Budget, had been finalised on the basis of the five-point priority agenda of the NDA government, which included enhanced employment and eradication of poverty, a second green revolution, infrastructure development and fiscal consolidation.

With the UPA government now at the helm, the priority agenda of its predecessor has been virtually junked, and all departments have been asked to work according to the CMP.

Facts and figures

• Central ministries told to keep reshuffle of Plan outlay within resources indicated in the Interim Budget
• Consultations begin with ministries of agriculture, health and education
• The CMP has stipulated that public spending on health should be raised to 2-3 per cent of the GDP
• In pre-Budget meetings, ministries have been asked to finalise allocations as per the roadmap contained in the CMP
• The exercise was being undertaken in a way to ensure that the allocation of additional could be done without a massive hike in the budgetary support.
• As the the post of deputy chairman of the Planning Commission is vaccant, the finance ministry is likely to finalise the amount on its own