PM for larger plan sans fiscal prudence trade-off

Prime Minister Manmohan Singh today endorsed the need for a larger plan allocation but cautioned that this cannot come at the cost of fiscal prudence and stability.

Singh's remarks assume importance in the wake of reported differences between the Planning Commission and the Finance Ministry over Fiscal Responsibility and Budget Management (FRBM) targets.

"I appreciate and endorse the need for a larger Plan, not just in absolute terms but also as a proportion of GDP. I would, however, like to sound a word of caution that this cannot come at the cost of fiscal prudence and stability," he said while delivering the speech at the meeting of the full Planning Commission headed by him.

Singh reasoned that higher spending was a necessity with the government determined to provide for as in the past three years. "But this has to matched by improvements in the efficiency in expenditure, a focus on outcomes and expansion of investments from all sources," he said.

The Prime Minister said salutory work in the infrastructure side has to be matched by corresponding efforts in other areas and adviced the Planning Commission to prioritise competing programmes.

"The Planning Commission must undertake a thorough review of ongoing programmes to eliminate those which have outlived their original rationale. The nation cannot afford any laxity in this regard. Simultaneously it must implement independent monitoring of our flagship programmes so that we can have evidence based analysis on how to improve this." He also sought greater involvement of the States in those programmes which are funded by the Centre but are in their domain.