The Planning Commission has asked the finance ministry to clearly differentiate between the domestic budgetary support (DBS) and externally aided projects (EAP) components of the gross budgetary support (GBS) for the annual plans.

Such a move would make the process of allocations more credible and also help in formulating realistic plan proposals, the commission has argued. Involving the plan body in this exercise would allow it to link allocations with the performance of concerned ministries or departments at the time when revised estimates are finalised.

Currently, GBS is granted with the condition that the first draw on it is to be permitted for funding EAPs. This is done in order to maximise utilisation of externally aided funds.

However, the commission has argued that this adversely affects the availability of resources to meet the requirements of programmes funded from DBS. The current procedure results in DBS being residually adjusted. Indicating it separately would result in more effective planning and implementation of programmes funded under this component, the commission has said. The EAP component could at the same time increase or decrease, depending on the overall availability of resources and their utilisation by the concerned ministries.

The Planning Commission has asked for a GBS of Rs 7,05,000 crore for the 10th Five Year Plan, an increase of 1.9 times over the GBS for the 9th Plan which stood at Rs 3,74,000 crore.

The commission has said the proposed increase is consistent with the governments’ decision to raise GBS to 4.5 per cent of GDP in the 10th Plan period.

However, the finance ministry is unlikely to agree to this proposal. Top officials have already said that the ministry can give only a 10 per cent hike to GBS each year. A 10 per cent annualised increase over the 9th Plan figure adds up to only Rs 6,02,330 crore.