New Delhi: Several Union ministries will have to make do with less money than they had demanded from the government for their programmes in 2008-09 with the finance ministry communicating to the Planning Commission that it will not be able to allocate more than Rs2.28 trillion to these.
The ministries had made a demand for Rs3.44 trillion under the so-called gross budgetary support, or GBS, the money allotted by the finance ministry through the Union Budget.
The Planning Commission, the country’s apex planning body, has worked out that the GBS should be Rs2.50 trillion. In 2007-08, the GBS was Rs2.05 trillion.
“The finance ministry’s estimates are based on a joint exercise done by the finance ministry and the Planning Commission which was driven by the need to reduce the fiscal deficit to 3% in 2008-09,” said a senior government official close to the move but who did not wish to be identified.
He added that the lower allocation in the forthcoming Budget will result in substantial under-financing of several priority schemes.
According to the Fiscal Responsibility and Budgetary Management (FRBM) Act, the government has to cut its fiscal deficit to 3% of gross domestic product (GDP) by fiscal 2009. The Planning Commission, which rationalizes the requirements of various ministries, and the finance ministry have been working together to arrive at an acceptable number for the GBS.
A significant portion of the GBS is spent on flagship government programmes such as the mid-day meal scheme, the Sarva Shiksha Abhiyan (an education programme), the National Rural Health Mission, the National Rural Employment Guarantee Scheme (NREGS), the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and on parts of Bharat Nirman, a programme that seeks to create rural infrastructure.
The higher GBS sought by various ministries is largely in line with the focus of the 11th Plan, which spells out the government’s priorities for the five years to 2012. The Plan focus is on rural development, education, agriculture and irrigation and health and it has estimated that the government will spend 75% of its total expenditure on these sectors compared with 55% in the 10th Plan.
Under the proposed GBS allotment by the finance ministry, agriculture is projected to get an additional allocation of 12% (over last year’s budget); health and family welfare 16%; and rural development, which has several Centrally sponsored schemes, including some Bharat Nirman projects and NREGS, only 9%.
According to Pronab Sen, chief statistician, the finance ministry’s estimated allocation of Rs2.28 trillion, in real terms, is constant when compared with last year’s allocation.
“This being the last year of FRBM, the finance ministry is under pressure to maintain the revenue deficit,” he said.
Sen added that it would be interesting to see which schemes the government continues. “In my opinion the substantial part of the funding will go towards NREGS as it has been extended across the country. It may require an additional Rs9,000 crore,” said Sen.
G. Devarajan, national secretary of the All India Forward Bloc, one of the four Left parties that support the United Progressive Alliance government at the Centre without being part of it, said the finance ministry’s lower GBS allocation continued the trend set by previous budgets presented by finance minister P. Chidambaram.
“The first time, we demanded an allocation of Rs1 lakh crore for the priority sectors and he asked us as to how he would fund it. So, the next time, we gave him a detailed plan for resource mobilization. He paid no heed to our suggestions,” Devarajan added.
“It is unfortunate that the finance minister’s priority is something else and not the sectors that matter to the aam aadmi (common citizen). This proves yet again that development is not on the agenda of this government,” said Mukhtar Abbas Naqvi, a vice-president of the main opposition party, Bharatiya Janata Party.
Ashish Sharma contributed to this story.