Pranab meets Montek to discuss Budget

Finance Minister Pranab Mukherjee met Planning Commission Deputy Chairman Montek Singh Ahluwalia today to discuss the availability of government resources for the coming General Budget.

The meeting comes at a time when the Planning Commission is in the process of prioritising sectors and deciding upon allocations in the Budget, scheduled to be presented on February 26. Official sources have told Business Standard that the finance ministry and the Planning Commission are likely to finalise the gross budgetary support (GBS) at around Rs 3.73 lakh crore, which is 15 per cent more than the GBS in 2009-10.

Officials reason that the increase will take into consideration the rise in inflation and the need for more expenditure in certain sectors like education, agriculture and rural development.

The finance ministry is also taking into consideration new schemes that are yet to be implemented like the Right to Education, which got clearance in 2009.

Various ministries have been building up pressure on the Plan panel for higher allocation, though a government official said: “The decision to give 15 per cent higher support is almost final.”

The increase in GBS for 2010-11 will be almost equal to the increase given in the current financial year, which at Rs 3.25 lakh crore has been around 14.9 per cent if compared with the revised estimates of 2008-09.

If compared to the original support estimated at the beginning of 2008-09, the increase was a massive 33 per cent. The difference was on account of extra spending by the government to stimulate the economy.

A 15 per cent hike in GBS will be almost double the average rate of inflation of around 7 per cent which indicates an actual increase in government spending.

However, such a rise is much less than the demand of an 82 per cent increase in GBS by 58 ministries and government departments. An 82 per cent increase in GBS will translate into Rs 4.09 lakh crore in 2010-11.

Among the demands from the ministries, the Department of Higher Education has sought a 118 per cent increase in budgetary support, while the Department of School Eucation is looking for an increase of 110 per cent. Other ministries like civil aviation, housing, urban development have also asked for significant increases in their allocation.