Panel against slashing GBS fund

Planning Commission has sought the intervention of Prime Minister Atal Bihari Vajpayee to ensure the Tenth Plan provision of a Gross Budgetary Support of Rs 1,59,000 crore is retained in the Budget for 2004-05 in conformity with the National Development Council mandate.

In a letter to the prime minister, Deputy Chairman of the Commission K C Pant said, "It is felt that the NDC-approved outlays and GBS provisions should be treated as sacrosanct, not to be trifled with".

Last year, against the projected GBS of Rs 134,000 crore, the actual budgeted amount was Rs 120,974 crore and a large part of the shortfall was taken care of through additional allocation.

"Such adhoc allocation, made to states and ministries, separately by the ministry of finance leads to subversion of the Plan process," Pant said.

Highlighting the impact of such a short provisioning on key elements of the Plan, Pant said it would result in curtailment of Plan resources for job creation, which would hit the eight per cent growth rate targeted during the Tenth Plan and 10 million jobs.

This would also affect investments in the infrastructure sector and Space and Atomic energy programmes where China is already having an edge over India and in "highly emotive areas like education, health and nutrition, he said.

Citing another reason to retain the allocated GBS, Pant said this was necessary to implement the various programmes announced by the prime minister from time to time.

The GBS of Rs 1,59,000 crore should be easily attainable as GDP in 2003-04 is expected to grow at 7.2-8 per cent and the annual inflation rate is expected to be around 5.5 per cent, an increase of up to 13 per cent over last year's actual GBS of Rs 131,000 crore, would in real terms not alter the GBS to GDP ratio, Pant said.

"Thus the corresponding provision to last year's actuals of Rs 1,31,000 crore will be Rs 1,48,000 crore this year. A provision of Rs 1,59,000 crore represents only a marginal step-up in GBS to GDP ratio and its impact on fiscal deficit will be minimal," he said.