With the Union finance ministry allowing a meagre hike of 5% in the Union plan budget 2013 — the lowest in the UPA regime — you should not expect even moderate expansion of the government's social welfare schemes.The finance ministry is said to have asked the Planning Commission to increase the gross budgetary support (GBS) or plan budget for 2013-14 by around Rs 26,000 crore, which is 5% addition to Rs 5,21,000 crore given in the budget of 2011-12.
The plan panel had suggested three scenarios — five, 10 and 15 % increase — to the finance ministry considering the huge demand of jump in allocation from the ministries.
The government sources said the finance ministry had opted for the lowest hike stressing on the need to maintain fiscal deficit to less than 5% in the budget of 2013-14. In fact, the proposed hike is the lowest in percentage terms the nine of the UPA-government and would hit expansion of existing schemes in the last budget before the 2014 polls. In absolute terms, it would be higher than the increase in first two financial years of the UPA government (see graphic).
A plan panel functionary said "the time has come for prudence to avoid fiscal cliff" and firm pinching measures would have to be taken to revive the economy. "Economy cannot be allowed to slump in name of populism," he said, admitting the low hike would hit the government’s plans of expansion of many health, educations schemes.
Plan panel deputy chairperson Montek Singh Ahluwalia had told journalists that the availability of resources for welfare measures were falling because of substantial rise in the government’s subsidy bill, which is projected to cross R2,50,000 crore in this fiscal year.
And, the finance ministry's direction has proven him right with the government expected to jack fuel prices to control the subsidy burden. It is also expected to announce additional measures to keep subsidy below 2% of the GDP in the budget.