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Economic slowdown: Poor to feel fund crunch

Plan panel redraws 12th plan; to seek 33 % increase in allocation.

business Updated: May 28, 2012 20:58 IST
Chetan Chauhan
Chetan Chauhan
Hindustan Times

The global economic slowdown may pinch the poor in India.

The Planning Commission is redrawing its projections for the 12th five year plan (2012-17) in wake of current global economic situation and could end up scaling down money for welfare schemes.

Health, education and rural development are not expected to get the hike they had sought and allocations for some other ministries are likely to fall, prompted by a lower growth. The panel had initially targeted annual economic growth of nine percent in the 12 plan but achieving even eight percent appears difficult.

According to documents accessed by HT, the plan panel had initiated decided to seek an increase of about 50 % in allocations for the plan considering that ministries had sought over Rs 6,00,000 crore (Rs 6000 bn) as additional resources. But, the increasing gloom world-wide and its implications visible in India, the plan is likely to seek about 33 % increase in allocations as compared to 11th plan (2007-12).

In simpler terms, it means that the UPA may offer less than Rs 1,1662 or US $ 30 per capita per annum for health lower, which is lower than what its neighbours Bhutan and Sri Lanka spends. The Bhutanese government spends around every year US $ 57 per capita on health and Sri Lankan government around US % 42, as per World Health Organisation figures.

Prime Minister Manmohan Singh had described the 12th five year plan (2012-17) as health and education plan assuring higher allocation at the National Development Council meeting in 2011 called to approve the approach paper for the 12th plan.

Since April 2012, the economy has witnessed a downward swing and the planning commission’s own projection of allocating US $ 30 (Rs 1,662) per capita per annum as compared to present US $ 20 (Rs 1,108) for health appears infeasible.

“Considering poor revenue generation achieving the proposed roll out of the health sector may be difficult,” says minutes of a recent plan panel meeting held to discuss resource allocation for 12th plan in wake of global economic slowdown.

Plan panel officials also said the economic slow-down can increase the time-period for implementing UPA government’s ambitious universal health scheme (UHS) aimed at providing basic health facilities to all citizens. “With the present revenue stream rolling out UHS will be difficult,” a senior plan panel functionary said.

With health, the UPA government’s target to almost double gross enrollment ratio (GER) in higher education to 30 % by 2020 would also be hit. The HRD ministry requires Rs 87,000 crore in next four years to support expansion of state universities, increase in support to scholarship programmes and interest subsidy, key to achieve the target.

“Providing that much money is not possible,” an official said, adding that both health and education ministries have been asked to re-draw their plans.

Only two --- Abhijit Sen and Mihir Shah --- of the eight plan panel members have agreed to the re-worked allocations. Others like B K Chaturvedi, in-charge of infrastructure, Sayeeda Hamid, in-charge of health and Narendra Jhadav, in-charge of education, are seeking higher allocation. “We are working out the final allocations,” a senior plan panel functionary said, adding the situation will be clear by early June.

First Published: May 28, 2012 20:56 IST