Now Cong fears strict fisc target

The Congress, which plans to talk to the Planning Commission on the approach paper to the 11th Plan, is opposed to strict adherence of targets under the Fiscal Responsibility and Budget Management (FRBM) Act.

The party fears the government may not have enough resources to spend just before the next general elections if the tight fiscal discipline prescribed by the Act is maintained.

This concern figures in a note prepared by the party ahead of its meeting with the Planning Commission.

The note quotes the approach paper as saying that increase in availability of resources will be relatively modest in the first two years of the plan. This, the paper says, will be followed by a fairly sharp rise.

According to the paper, while achieving 9 per cent growth, the most vulnerable period will be the first two years of the Plan period during which the possibility of a cyclical downturn will be complicated by the impact of oil prices on Indian and other economies and by lack of sufficient flexibility due to strict targets under the FRBM Act.

According to the Plan panel, availability of budgetary resources of the Centre and states in the 11th Plan would be 9.1 per cent of the GDP if the FRMB targets were adhered to and 9.5 per cent of the GDP if the targets were allowed to slip by two years. The first alternative implies much lesser resources in the first two years of the 11th Plan.

Referring to this, the note said, "The obvious political fallout will be that in 2007-08 and 2008-09, we may fall short of resources while funding development projects, which in literal terms means that we may not have adequate funds just before the next parliamentary elections."

The party's meeting with the Planning Commission is likely to take place in the last week of October or early next month.