Even as Budget preparation exercise has gained momentum, the finance ministry and the Planning Commission have failed to agree over the gross budgetary support for the annual plan 2007-08.
While the finance ministry has agreed to increase GBS to Rs 200,000 crore from earlier agreed sum of Rs 1,96,000 crore, the Commission has indicated that an additional Rs 15,000 crore would be required to meet the requirements of the priority sectors and increased demand for flag-ship programmes.
In the earlier meeting on GBS convened by the prime minister's office (PMO), the plan panel sought to increase gross budgetary support for next year by 22% to about 2,12,000 crore up from this year's (2006-07) GBS of 1,72,728 crore. This was, however, refused by the finance ministry on the ground that enough revenue could not be generated for increasing plan expenditure to that level.
The finance ministry has now agreed to provide a 16% increase in GBS over this year's support to Rs 200,000 and it is unlikely that it would go any further on the matter considering that the ministry is also looking at managing the deficit targets under the provisions of FRBM Act, said an official source.
Meanwhile, the Planning Commission is all set to send fresh requirements for plan funding to the finance ministry this week. The commission is under pressure from various ministries over higher allocations for next fiscal.
While government is looking at austerity measures to achieve growth while maintaining fiscal discipline, ministries like science and technology has sought 500% increase in allocations. Other ministries like HRD, Agriculture, Rural Development have all sought a substantial jump in plan expenditure by the government.
The source said that the government is looking at pruning the central sector and centrally sponsored schemes (CSS) to unlock funds for utilisation in meeting the plan proposals of various ministries. In fact, the restructuring exercise has been identified as the core component of the Annual Plan 2007-08.
In all 155 CSS and about 1,251 central sector schemes are in operation in 2006-07. The government wants to terminate 103 CSS and 120 central sector schemes at the end of Tenth Plan.
However, this would have to be first ratified buy the National Development Council (NDC). Even these exercises are not enough to meet the aspirations of all sections and the finance ministry would have to look at other measures to provide a balance between expenditure requirements and maintain-ing fiscal prudence.