GBS: Plan panel, Finmin meet mid way

The support is likely to be Rs 2,28,000-2,50,000 crore.

The gross budgetary support (GBS) for annual Plan 2008-09 is likely to be between Rs 2,28,000 crore and Rs 2,50,000 crore. The matter has been discussed extensively between the Planning Commission, the Ministry of Finance and the Prime Minister's Office.

Official sources said the figure would be a consensus between the Plan panel's projected requirements and the finance ministry's intent to support overall improvement in outcomes and allocations.

The finance ministry had last month said it could not go beyond Rs 2,28,000 crore, Rs 22,000 crore less than the minimum amount projected by the Plan panel.

The Plan panel's recommendation of Rs 2,51,082 crore for 2008-09 is around 22 per cent more than the Budget estimates for 2007-08. Of this, Rs 1,89,067 crore is proposed as central GBS and Rs 62,015 crore as GBS for states. 
 

SECTORS LIKELY TO SEE CUTS IN GBS IN 2008-09 (Rs crore)
Ministry/ Department	Ministry's  demand for  annual Plan  2008-09	Plan panel's projected  minimum requirement	Finance   Ministry's proposal
Fertiliser	1031	400	58
Power	31828	9000	5074
Agriculture and  cooperation	8973	6900	6200
School education  and literacy	40505	27500	25100
Home Affairs	1883	1000	490
Higher education	12800	7500	6594
Rural Development	41258	32500	30000

Officials at Yojana Bhawan, the headquarters of the Planning Commission, say the additional resource allocation proposed by them be earmarked for various priority sectors, including agriculture, health and family welfare, literacy and rural development.

Plan panel officials have also pointed out that the implication of reducing the GBS to Rs 2,28,000 crore, as indicated by the finance ministry, will result in "very serious under-financing of a very large number of priority schemes".

The finance ministry's GBS offer emerged from an exercise conducted with the Planning Commission. The exercise was conditioned by the need to reduce the fiscal deficit in 2008-09 to 3 per cent of the gross domestic product (GDP).

According to the Plan panel, this implies a modest growth in resources for the first two years of the 11th Plan (2007-12), with a sharp increase in the last three years of the Plan period.

In effect, the panel wants allocations to be higher in 2008-09, with growth in allocations being offset by lesser annual hikes in subsequent years.

The exercise to finalise the GBS for 2008-09 saw central ministries estimating their funds requirement at a massive Rs 3,44,761 crore. Various Planning Commission members scrutinised these demands and substantially cut down the figures.