PlanCom asks states to hold back demand for additional funds

The Planning Commission has asked the state governments to hold back their demands for additional fund till November in view of slow economic recovery.

"We have asked the states to hold back their demand for additional Plan spending till November end in view of prevailing economic situation. We may take a call on these demand only after November after assessing the economic scenario," Planning Minister Rajeev Shukla told PTI.

According to experts, there seems to be slow recovery in economic situation till now going by the dismal economic growth of 4.4% in the first quarter (April-June) this fiscal.

The ADB in its recent forecast has lowered the growth projection for the current fiscal at 4.7%, down from earlier estimate of 6%.

The next quarterly Gross Domestic Product or economy data for the second quarter (July-September) would be released by Ministry of Statistics and Programme Implementation on November 29.

Experts say they would be able to comment about the rebound of the economy only after the second quarter data is available. The country had recorded a decade low economic growth of 5% in the previous fiscal.

Shukla also said that during the meetings with the states' representatives, they are asked to maintain fiscal discipline.

According to a Finance Ministry circular, states cannot spend more than 33% of the allocated Plan expenditure in the last quarter (January-March) of this fiscal and it should not be more than 15% of the total in last month (March) next year.

On any move to cut the Plan expenditure also this time to keep a tab on fiscal deficit, Shukla said, "There has been no discussion with the Finance Ministry on this issue so far."

During the last fiscal, the government had cut around Rs 92,000 of Plan expenditure to keep the fiscal deficit at 4.9% of GDP.

The government has set a fiscal deficit target of 4.8% of GDP for the current fiscal.  Earlier last month, the Finance Ministry had announced cutting non-plan expenditure by 10% and outlined certain austerity measures to reduce burden on exchequer.