Allow forex to fund CMP: Plan panel

The Planning Commission has written to the finance ministry, saying that the fund requirement for programmes related to the national common minimum programme was so large that it should be allowed to use part of the foreign exchange reserves for Plan spending in the next fiscal.

The gross budgetary support for the annual Plan for 2005-06, on the basis of revised Tenth Plan requirements, is around Rs 170,000 crore. However, this does not take into account the additional requirements placed on the Plan funds on account of the national common minimum programme schemes.

"The communication has been sent to the finance ministry," said an official.

With Budget preparations under way, the Planning Commission, which allots Plan funds to the states and central ministries, has made its position clear on the use of forex reserves.

The finance ministry and Reserve Bank of India have so far not favoured the idea of using foreign exchange reserves for funding infrastructure. A final decision has, however, been left to the Prime Minister.

At last count, ministries had asked for an additional Rs 52,000 crore for implementing the national common minimum programme schemes in the next fiscal.

Among the new and revamped programmes under the national common minimum programme are the mid-day meal scheme, employment guarantee programme, Backward States Grand Fund, a rural health programme and irrigation-related schemes.

The gross budgetary support for the current fiscal, at Rs 145,600 crore, was almost 20 per cent higher than the allocation of Rs 121,500 crore in 2003-04.

As per the Tenth Plan estimates, a gross budgetary support of Rs 191,000 crore was required for 2005-06. But that figure was based on a higher growth path. Accounting for the lower growth path that the economy is on, the demand should be revised downwards to Rs 170,000 crore, said officials.

Meeting the funds shortfall

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• The Planning Commission wants to use forex reserves to meet fund requirements for schemes related to the common minimum programme
• Several new and revamped schemes have been lined up as part of the common minimum programme. These have put a huge financial burden
• The Planning Commission had earlier proposed using $5 billion of the forex reserves, for three years, to fund infrastructure creation