Finance Minister Jaswant Singh has set the gross budgetary support for next fiscal at Rs. 117,500 crore, ignoring the Planning Commission's demand for higher allocation to fund the social sector and infrastructure projects. Singh, who met Prime Minister Atal Bihari Vajpayee twice after Davos conclave, secured his consent before finalising the GBS to support the Plan.
Singh has communicated his decision to the Planning Commission Deputy Chairman K C Pant who was hoping to sort out the issue with the prime minister’s intervention.
The Rs. 117,500 crore GBS translates to about four per cent hike over the allocation made in the current fiscal at Rs. 113,000 crore. Taking inflation into account, in real terms, the GBS for 2003-04 will remain frozen at the current year's level.
The GBS has not been hiked at a time when the government has targeted an economic growth rate of eight per cent annually during the Tenth Plan period. No increase in the GBS has taken the Planning Commission officials by surprise given the fact that during the last 15 years, on an average, the increase has been 10 per cent annually.
A senior Planning Commission official said that zero increase in GBS only means that the finance ministry has imposed a virtual "financial emergency", given the precariously placed finances of the Centre.
Expansion of social sector programmes especially in health, education, poverty alleviation, rural development may have to be put on hold. Ambitious programmes like Sarva Siksha Abhiyan -- education for all -- may have to be staggered out as the human resources ministry may not get the Rs. 4,000 crore sought for this programme. Packages announced for creating employment in rural areas, Jammu & Kashmir, Himachal Pradesh and newly carved states may also have to be spread over, Yojana Bhavan officials said.
Investment in infrastructure areas like power, railways and roads are expected to suffer in a big way. According to rough estimates, about Rs. 1,000 crore cut will be effected on rural roads project while the power ministry will have to manage without additional funds for hydro-electric projects.
The states which make most capital investments with support from the Centre may have to make good with a nominal hike in fund allocation. The Planning Commission may be able to make available Rs. 48,500 crore.
In an letter to Pant, the Finance Minister had said on December 4, 2002 that "…it is extremely unlikely that a provision of Rs. 134,064 crore for the second year (2003-04) of the Tenth Plan as GBS could be made".