The Hindu : National : Central Plan crosses Rs.10 lakh crore

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Tuesday, Jul 07, 2009
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National

Central Plan crosses Rs.10 lakh crore

Sandeep Dikshit

NEW DELHI: The government’s Central Plan for the first time crossed the Rs.10 lakh crore mark, as against a paltry outlay of Rs.193 crore in the first Budget. Of this, nearly 70 per cent will be towards non-Plan expenditure and the remaining Rs.3,25,149 crore towards Plan expenditure. The increase in non-Plan expenditure over last year’s budget is 37 per cent, and that in Plan expenditure is 34 per cent.

“For the first time, we have crossed the mark of total expenditure of more than Rs.10 lakh crore. I remember in the first Budget of Independent India the total expenditure was just Rs.193 crore, and from there we have moved up to Rs.10,20,838 crore,” noted Finance Minister Pranab Mukherjee, departing from the text of his speech.

Reasons for higher spending

The non-Plan expenditure has gone up mainly due to higher salaries following the Sixth Pay Commission’s recommendations, increased food subsidies due to higher minimum support prices for wheat and paddy, and higher procurement targets. Another reason was increased interest payment due to the high fiscal deficit during the previous fiscal.

A bigger Central Plan was also inevitable to beat the effect of the global slowdown that had impacted economic growth. As a result, a major part of the increase in gross budgetary support, by Rs.40,000 crore for the current fiscal, will be earmarked for public investment in infrastructure.

Advantage for States

States will also be able to raise an additional Rs.21,000 crore to boost rural infrastructure and raise the growth potential in general, with Mr. Mukherjee permitting them to borrow up to four per cent of their Gross State Domestic Product, as against the present 3.5 per cent.

This spending will be partly financed by tax receipts of Rs.6,41,079 crore, a fall of about Rs.36,000 crore in the previous fiscal. This, however, would be more than made up by a higher revenue of about Rs.45,000 crore.

The revenue deficit as a percentage of the Gross Domestic Product is expected to be 4.8 per cent, as against 4.6 per cent in the previous fiscal.

Mr. Mukherjee expects the fiscal deficit to be 6.2 per cent as against 6.8 per cent in the previous fiscal (excluding 1.2 per cent additional deficit due to the issuance of oil and fertilizer bonds).

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