Plan panel stand on funds questioned
Rupesh Janve / New Delhi September 25, 2006
http://www.business-standard.com/common/storypage.php?autono=259566&leftnm=3&subLeft=0&chkFlg=
The finance ministry has criticised the Planning Commission's proposal for
higher gross budgetary support in the 11th Plan. "On the one hand, the
approach paper is recommending higher indebtedness by relaxing the Fiscal
Responsibility and Budget Management (FRBM) discipline, and on the other
hand, it is seeking higher gross budgetary support (GBS) due to lower
interest payment. With interest rates firm on high credit demand, this is a
self-contradictory prescription," the ministry commented on the approach
paper for the 11th Plan. Calling for a review of the gross budgetary
support for the plan, the ministry said the approach paper assumed higher
outlays for social sector schemes, which could be realised by a combination
of an increase in tax revenues, cutback in non-Plan expenditure, and an
increase in fiscal deficit, even if it implied a dilution of FRBM
discipline. It said the gross budgetary support could have a provision
for factoring in any addition to the Budget which could increase the subsidy
bill. It also expressed concern over "insufficient attention" to the high
incremental capital output ratio (ICOR) and emphasised the need for its
reduction. "There is insufficient attention to this aspect of economic
growth attributable to gains in efficiency, productivity and technological
improvement," it said. It required that ongoing projects were completed
on time and time and cost overruns avoided. This, in turn, required adequate
funding of projects in hand before taking up of new projects, the ministry
added. North Block also told the commission that the massive support
given to the National Urban Renewal Mission would be reconsidered and
redirected. All centrally sponsored schemes, except those in national
priority areas, should be transferred to state governments.
Rupesh Janve / New Delhi September 25, 2006
http://www.business-standard.com/common/storypage.php?autono=259566&leftnm=3&subLeft=0&chkFlg=
The finance ministry has criticised the Planning Commission's proposal for
higher gross budgetary support in the 11th Plan. "On the one hand, the
approach paper is recommending higher indebtedness by relaxing the Fiscal
Responsibility and Budget Management (FRBM) discipline, and on the other
hand, it is seeking higher gross budgetary support (GBS) due to lower
interest payment. With interest rates firm on high credit demand, this is a
self-contradictory prescription," the ministry commented on the approach
paper for the 11th Plan. Calling for a review of the gross budgetary
support for the plan, the ministry said the approach paper assumed higher
outlays for social sector schemes, which could be realised by a combination
of an increase in tax revenues, cutback in non-Plan expenditure, and an
increase in fiscal deficit, even if it implied a dilution of FRBM
discipline. It said the gross budgetary support could have a provision
for factoring in any addition to the Budget which could increase the subsidy
bill. It also expressed concern over "insufficient attention" to the high
incremental capital output ratio (ICOR) and emphasised the need for its
reduction. "There is insufficient attention to this aspect of economic
growth attributable to gains in efficiency, productivity and technological
improvement," it said. It required that ongoing projects were completed
on time and time and cost overruns avoided. This, in turn, required adequate
funding of projects in hand before taking up of new projects, the ministry
added. North Block also told the commission that the massive support
given to the National Urban Renewal Mission would be reconsidered and
redirected. All centrally sponsored schemes, except those in national
priority areas, should be transferred to state governments.