5% Hike In 97-98 Outlay Likely
The plan outlay for 1997-98 would be around Rs 91,000 crore, which is less than a five-per cent increase over the current years plan size of Rs 87,086 crore, finance ministry sources said.
The annual plan size has been kept low as the finance ministry is reluctant to enhance the budgetary support, expected to be around 38 per cent of the plan size. This was the level of support in the 1996-97 budget.
The government is also trying for savings in the plan by asking different ministries to go slow on expenditure till March. The idea is to use the unspent portion of the eighth plan, which ends on March 31, to increase budgetary support to the ninth plan, the sources said.
The governments concern over budgetary support indicates its reservations about generating higher revenues. This is also an indication that an increases in tax rates will be kept at a minimum in the budget to be presented by finance minister P Chidambaram tomorrow.
The size of the 1997-98 plan will be around 18 per cent of the ninth plan size. The allocation was 16 per cent of the five-year plan size in the first year of the eight plan in 1992-93. The H D Deve Gowda government, however, wanted a larger allocation in the first year of the ninth plan because this will be the first budget for a full year to be presented by it. The ninth plan begins from April 1.
The plan size for 1997-98 has been worked out on an ad hoc basis as the finance ministry and the Planning Commission are yet to agree on the extent of budgetary support to the ninth plan. Even the overall size of the ninth plan is being reexamined, although the cabinet and the National Development Council (NDC) have approved a size of Rs 875,000 crore.
The Planning Commission and the finance ministry are still holding discussions on the size of the ninth plan and the extent of budgetary support to it. Besides, sectoral deployment of funds and Central assistance to states in the ninth plan have also not been worked out.
Although the Economic Survey has indicated that the government will pay greater attention to the social sector, there is little likelihood of a major increase in Central allocation to the sector.
The increased expenditure on public distribution system is being charged to non-plan budget as it is a form of subsidy. Besides, the enhanced allocation of Rs 2,450 crore under the basic minimum services is being charged to the state sector, meaning that it will form part of the Central assistance to the states. Efforts are being made to enhance Central assistance to states to 45 per cent in the ninth plan and the effort is expected to show in the budget. Although Central assistance was 41 per cent of the eight plan outlay, the actual allocation had worked out to about 38 per cent.
Although the cabinet and the NDC have approved the overall size of the ninth plan, the ministry is still not ready to raise the amount of budgetary support.
The finance ministry is expected to raise Rs 332,000 crore by way of budgetary support for the Rs 875,000-crore ninth plan.
The ministry had earlier indicated that it was prepared to extend Rs 300,000 crore by way of budgetary support and had lobbied for restricting the ninth plan size to Rs 800,000 crore. Although it has been overruled, the ministry is still reluctant to raise the budgetary support.