Page 34 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Indian Economic Policy

Notes Table 1 : Eleventh Plan Projection of Resources
`
` Crores
`
`
`
Tenth Plan Realizations Eleventh Plan Projection
Centre State Total Centre State Total
1. Balance from current -1,27,166 -31,722 -1,58,888 6,53,989 3,85,050 10,39,039
Revenues (-13.5) (-4.5) (-9.6) (30.3) (25.9) (28.5)
2. Borrowings including 8,50,382 3,71,779 12,22,161 7,67,722 6,49,423 14,17,145
MC ` (89.9) (52.5) (73.9) (35.6) (43.6) (38.9)
3. Net inflow from abroad 16,121 — 16,121 — — —
(1.7) (1.0)
4. Gross Budgetary 73,937 3,40,057 10,79,394 14,21,711 10,34,473 24,56,184
Support (1+2+3) (78.2) (48.0) (65.3) (65.9) (69.5) (67.4)
5. Central Assistance -2.52,539 +2,48,677 -3,862 -3,24,851 +3,24,851
to States & UTs. (-26.7) (35.2) (-0.2) (-15.1) (21.8) -
6. Net budgetary support 4,86,798 5,88,734 10,75,532 10,96,860 13,59,324 24,56,184
(4 + 5) (51.5) (83.2) (65.1) (50.8) (91.3) (67.4)
7. Resources of Public 4,58,530 1,19,003 5,77,533 10,59,710 1,28,824 11,88,534
sector undertakings (48.5) (16.8) (34.9) (49.2) (8.7) (32.6)
8. Total Resources for 9,45,328 7,07,737 16,53,865 21,56,571 14,88,147 36,44,718
Public Sector (6 + 7) (100.0) (100.0) (100.0) (100.0) doo.6) (100.0)
As against this picture of Tenth Plan realizations, the Eleventh Plan hopes to generate ` 10,39,039
crores – 28.5 of the resources from balance from current revenues. The Planning Commission states :
“This outcome is the consequence of tighter fiscal discipline imposed by fiscal responsibility
framework, both at the Centre and the States and an optimistic revenue outlook driven by buoyancies
in revenue collections during the last three years of the Tenth Plan reflects the robust performance of
the economy.” The planners are conscious of the fact that this optimism may not be realized because
there are certain uncertainties associated with the impact of Sixth Pay Commission recommendations.
Equally important is the upward pressure on subsidies, particularly fertilizer and petroleum subsidies.
The hike in the international price of petroleum above $115 per barrel is already pushing the petroleum
subsidy very sharply. Similarly, fertilizer subsidies are also increasing. There is an urgent need to
undertake reform of the subsidies. However, the Central Government is not taking a courageous step
to control them, fearing backlash in the impending General Election due in 2009. This may upset the
optimistic calculations of the Planning Commission which will force the planners either to cut the
size of the Plan or take greater resort to market borrowing.
Resources of surplus from public sector undertakings are continuing their forward march and all
likely to finance 32.6% - or nearly one-third of the total public sector plan. But subsidies provided to
petroleum products may reduce resources generation by public sector oil companies – a major source
of resource generation. Actual realization from PSUs will be affected by two factors : (a) international
price of oil, and (b) the policy of the Central government on petroleum subsidies. If the realization
from PSUs decline in the Eleventh Plan, the country may witness a higher dose of market borrowing
to finance the Plan.
It is, therefore, difficult to agree with the rosy picture presented by the Planning Commission about
the financial pattern of the Eleventh Plan. A similar optimistic outlook was presented at the time of
the formulation of the Tenth Plan, but its financial pattern went haywire. In the absence of bold
policies in view of the problems of coalition government, actual realizations in the Eleventh Plan
may vary sharply from projected figures on various components.

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