Millennium Post

Slowdown effect: Plan panel advises states to hold funds demand till Nov

Facing uncertain economic conditions, Planning Commission has been forced to ask the state governments to hold back their demand for additional fund till November.

'We have asked the states to hold back their demand for additional plan spending till November end in view of prevailing economic situation. We may take a call on these demand only after November after assessing the economic scenario,' Planning Minister Rajeev Shukla said.
According to experts, there seems to be slow recovery in economic situation till now.  Economic growth stood at at dismal level of  4.4 per cent in the first quarter (April-June) of this fiscal and current account deficit (CAD) for the same quarter widened to 4.9 per cent of gross domestic product (GDP).

The ADB in its recent forecast has lowered the growth projection for the current fiscal at 4.7 per cent, down from earlier estimate of 6 per cent.

The next quarterly gross domestic product or economy data for the second quarter (July-September) would be released by Ministry of Statistics and Programme Implementation on 29 November.

Experts say they would be able to comment about the rebound of the economy only after the second quarter data is available. The country had recorded a decade low economic growth of 5 per cent in the previous fiscal.
Shukla also said that during the meetings with the states' representatives, they are asked to maintain fiscal discipline.
According to a Finance Ministry circular, states cannot spend more than 33 per cent of the allocated plan expenditure in the last quarter (January-March) of this fiscal and it should not be more than 15 per cent of the total in last
month (March) next year.

On any move to cut the plan expenditure also this time to keep a tab on fiscal deficit, Shukla said, 'There has been no discussion with the Finance Ministry on this issue so far.'

During the last fiscal, the government had cut around Rs 92,000 of plan expenditure to keep the fiscal deficit at 4.9 per cent
 of gross domestic product .

The government has set a fiscal deficit target of 4.8 per cent of GDP for the current fiscal, which Finance Minister P Chidambaram had termed as
 ‘red line which will not be crossed’.

Earlier last month  the Finance Ministry announced that it plans to cut down on non-plan expenditure by 10 per cent and outlined austerity
measures to reduce the burden on the Exchequer.
Next Story
Share it