Gross budgetary support (GBS) or the budget outlay for the central Plan is likely to see only modest growth in 2012-13 as against 18% in the current fiscal, as the government looks for options to rein in the fiscal deficit.
This will be achieved through reduction in allocations to some recently merged centrally sponsored schemes (CSSs) for the next fiscal and providing only token outlays for some new schemes in areas like HRD, rural development and irrigation, where the infrastructure for delivery will take time. The idea is to curb non-essential expenditure.
According to official sources, the government is, however, clear that politically sensitive flagship schemes cannot be starved of funds. It is also reconciled to fact that a drastic reduction in revenue (non-Plan) expenditure through subsidy reform might not be a practical option in the immediate future.
A modest growth in GBS for 2012-13 will buck the trend in recent years which saw this outlay increasing at high rates.
Of course, the Plan includes spending by public sector enterprises, which is not included in the Budget, as well as funds given to states for their respective Plans.
The finance ministry allocated R6.6 lakh crore for CSS for the 11th Plan period ending this fiscal, accounting for roughly 42% of the GBS for the period.
Sources said that though a handful of new schemes may be announced in Budget 2012, they would be provided only token allocations of R100-200 crore. Similar small allocations would be made for CSSs created out of merging several existing schemes.
The CSSs are special programmes run by central ministries and administered by state governments. While the Centre provides funds for these schemes through GBS, states also pitch in with a portion of the funding.
?The year 2012-13 will also herald the start of the 12th Five-Year Plan. The token allocations will allow the government to focus on key schemes while giving new and restructured schemes a one-year window to work out details and come up with firm investment plans so that full funding could be provided in the next year,? said a source in the Planning Commission.
Though the fiscal deficit for 20011-12 is budgeted at 4.6% of the GDP, it is likely to be above the 5.5% mark. The government has already announced additional borrowings of R52,800 crore on account shortfall in revenues and has cleared two supplementary demands for additional expenditure totalling close to R66,000 crore.
?Controlling fiscal deficit is our prime concern at present and all avenues for expenditure control will be explored. We will also bring in a new road map for deficit control next year to spell out the government?s intent clearly,? said a senior finance ministry official.
The change in CSS allocation for 2012-13 follows the government?s desire to undertake a major restructuring of schemes during the next fiscal. Various schemes that are either in conflict with other operational CSS or where allocations are low would likely be merged or phased out. The restructuring strategy is based on inputs from the recommendations of the committee on CSS headed by Planning Commission member BK Chaturvedi. The committee, which has already submitted its report to the PMO, has suggested bringing down operational CSS from 147 to about 59. The Rangarajan panel too has suggested reducing the number of CSS as an expenditure control measure.?
?Cutting Plan expenditure will not help the government check deficit in a big way. Efforts should be to tackle cuts in non-Plan expenditure, especially food, fertiliser and oil subsidies,? said another Planning Commission official who did not wish to be identified.
The budgetary allocation for CSS in 2011-12 was about Rs 1.9 lakh crore out of total Plan expenditure of about Rs 4.4 lakh crore. With flagship schemes such as MGNREGA and Bharat Nirman constituting 80% of total plan expenditure on CSSs, there is little room for the government to make savings by reducing spends on other small or new schemes.
Apart from financial intervention, the Planning Commission will invoke its special powers to clamp down on wasteful spending.
The guidelines have also given power to the Planning Commission to approve over 10% increase in the annual plan of central ministries provided in the Budget. Only after this approval could the proposal be taken up by the finance ministry for final clearance.
