Prime Minister Manmohan Singh has chipped in to end resistance from key ministries against finance minister P Chidambaram’s fiscal consolidation move imposing restrictions on their expenditure kitty.
Chidambaram’s ministry is not willing to increase the gross budgetary support (GBS) or plan-size - money used to fund central government schemes - over Rs. 5,21,000 crore, the allocation in 2012 budget to keep have a fiscal deficit of 5.2%.
The GBS is the government spending on social sector schemes such as Bharat Nirman, rural employment guarantee and National Rural Health Mission. Besides, it includes Centre's assistance to various states and union territories plans.
The finance minister has made it clear to the Planning Commission, which allocates money to different ministries, that the GBS increase in the past few years was arbitrary and was a cause for fiscal mismanagement.
It is time for correction.
The ministry has suggested that the plan size should be just 10% of the revised budget estimate which is around 20% less than the original allocation for the current financial year.
The decision has invoked a fury of angry representations from different ministries, who feel that implementation of their schemes would be hit if the finance ministry’s diktat is accepted.
Rural Development secretary Vijay Kumar has written to Planning Commission secretary Sindhushree Khullar stating that the new allocation formula would jeopardise the ministry’s ability to implement the schemes.
Tribal affairs minister Kishore Chandra Deo and defence minister AK Antony have also written to Prime Minister expressing their anguish at the proposed allocation for their respective ministries. “Defence minister had even said that country’s strategic abilities would be compromised,” a senior government official said.
They are not the only ones as several other ministries have expressed their reservation over the proposed allocations forcing Prime Minister Manmohan Singh to play referee.
Government sources said that the PM had called plan panel deputy chairperson Montek Singh Ahluwalia and Chidambaram for a meeting on Friday evening to take a view on the plan size for 2013 budget.
Sources said that a decision to increase the plan size by 15 % of the revised estimate was taken with the Prime Minister asking the plan panel to provide funds sufficient funds to the ministries, which have prudently and effectively utilized the money given in the past year.