Plan panel stand on funds questioned

The finance ministry has criticised the Planning Commission's proposal for higher gross budgetary support in the 11th Plan.

"On the one hand, the approach paper is recommending higher indebtedness by relaxing the Fiscal Responsibility and Budget Management (FRBM) discipline, and on the other hand, it is seeking higher gross budgetary support (GBS) due to lower interest payment. With interest rates firm on high credit demand, this is a self-contradictory prescription," the ministry commented on the approach paper for the 11th Plan.

Calling for a review of the gross budgetary support for the plan, the ministry said the approach paper assumed higher outlays for social sector schemes, which could be realised by a combination of an increase in tax revenues, cutback in non-Plan expenditure, and an increase in fiscal deficit, even if it implied a dilution of FRBM discipline.

It said the gross budgetary support could have a provision for factoring in any addition to the Budget which could increase the subsidy bill.

It also expressed concern over "insufficient attention" to the high incremental capital output ratio (ICOR) and emphasised the need for its reduction.

"There is insufficient attention to this aspect of economic growth attributable to gains in efficiency, productivity and technological improvement," it said.

It required that ongoing projects were completed on time and time and cost overruns avoided. This, in turn, required adequate funding of projects in hand before taking up of new projects, the ministry added.

North Block also told the commission that the massive support given to the National Urban Renewal Mission would be reconsidered and redirected.

All centrally sponsored schemes, except those in national priority areas, should be transferred to state governments.