Finance minister gets free hand for budget reforms

PM asks ministers not to dissent and directs plan panel to abide by Chidambaram’s decision on fund allocation. Chetan Chauhan reports.

Updated on: Feb 21, 2013, 07:16:12 IST

Hindustan Times | By Chetan Chauhan, New Delhi

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The budget 2013-14 would witness a firm stamp of finance minister P Chidambaram with Prime Minister Manmohan Singh giving him a free hand even in areas which are not the traditional domain of the finance ministry — allocating plan funds to the Central ministries and state governments for welfare measures and building infrastructure.

Chidambaram has been instrumental in unleashing the second economic reforms which saw the Sensex crossing 20,000 mark for the first time in about two years.

He had bigger plans for 2013-14 by fiscal consolidation in the budget, for which some steps were already taken. But, the demand of the Planning Commission to increase Central plan size or gross budgetary support (GBS) by around 15% for 2013-14 would have upset Chidambaram's bid to restrict fiscal deficit to 5.3% of the Gross Domestic Product (GDP).

The central plan is funded almost equally from government's own accounts or the annual budget and the resources that flow in from public enterprises. As the Central government's own revenue has not increased at the anticipated rate, meeting the plan panel's wish would have meant more loans and higher fiscal deficit.

Chidambaram was not willing to compromise on his fiscal discipline plan and the plan panel, under pressure from ministries, decided to take the matter to the PM Singh, who is also the plan panel chairperson.

Source said, the PM saw a logic in the Chidambaram's fiscal plan and did not provide much reprieve to the plan panel. Planning Commission deputy chairperson Montek Singh Ahluwalia was asked to abide by the finance ministry's decision.

The Prime Minister also ensured that there is no protest from the Central ministries to almost flat or slight increase in allocations resulting from finance ministry's decision to hike the GBS by 5.8% to Rs. 5,50,000 crore for 2013-14 as compared to Rs. 5,21,000 crore in 2012-13.

"All ministers were quietly told to accept what they get," a senior government official said. "We are just a call centre this time," was a comment of a senior planning commission official at meeting on GBS. "All decisions are been taken by the finance ministry," the official added.

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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