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Plan panel to hold talks today on 12th plan strategy approach
Gripped by slumping economy and burgeoning fiscal deficit, the apex planning body Planning Commission is juggling with its strategy to approach to 12th five year plan (2012-17). The Plan Panel is holding a meeting of its think-tank in this regard today.
While the panel can’t re-write the approach to the 12th plan since it has already been approved by National Development Council (NDC), Montek Singh Ahluwalia, Deputy Chairman of the panel has asked the panel members to evolve a strategy in view of resources constraint and widening fiscal deficit.
In the approach paper to12th plan, the panel has set a cumulative growth target of 9 per cent in the next five years.
However, the latest developments including missing disinvestment target and increasing fiscal deficit have forced the panel to re-think its strategy.
The meeting occurs when the Finance Ministry’s plan to contain fiscal deficit through disinvestment in PSUs didn’t materialise on Wednesday.
The Cabinet on Wednesday deferred the proposal of Disinvestment Department to raise Rs 40,000 crore from divestment of PSUs through buyback and other modes.
As the market conditions are not conducive for disinvestment through public offer, the Finance Ministry had proposed to raise funds through buyback and cross holding among PSUs.
Sources in the panel said that the meeting is called to conclude the plan approach at least for the next two years, which may see thrifty allocations.
With an aim to use resources more efficiently, the panel will discuss the BK Chaturvedi report on rationalising Centrally Sponsored Schemes (CSS).
The report would come into implementation from this annual plan itself (2012-13), according to the sources. The report was approved by NDC. It rationalises CSS to 59 schemes from the current 147 schemes.
This will help the panel in manoeuvring funds. The meeting will also discuss how to generate new avenues of resources to contain fiscal deficit in the upcoming budget ahead. After this, later in the day, Ahluwalia will meet the Union Finance Minister Pranab Mukherjee to hold consultations with him for the upcoming budget.
The Government has very limited resources considering the slowing growth and increasing fiscal deficit. It had targeted to reduce the fiscal deficit to 4.6 per cent of GDP in current year.
However, on account of high subsidy and additional borrowing, it is expected to shoot beyond 5.5 per cent.
Recently, the panel in its communication to the central ministries had asked them to prepare their annual budget proposal for the FY2012-13 with an increase of 5 per cent over the current year.
The increase is to be in current price terms, including impact of inflation. It gave two more alternative scenarios at 10 per cent and 15 per cent increase over FY2011-12.
It is probably for the first time in the recent history that the plan panel has proposed a meager hike of 5 per cent. In a 5 per cent increase scenario, it would be very difficult to attain the target of 9 per cent in the 12th plan.
Highlights
Gripped by slumping economy and burgeoning fiscal deficit, the apex planning body Planning Commission is juggling with its strategy to approach to 12th five year plan (2012-17). The Plan Panel is holding a meeting of its think-tank in this regard today.
While the panel can’t re-write the approach to the 12th plan since it has already been approved by National Development Council (NDC), Montek Singh Ahluwalia, Deputy Chairman of the panel has asked the panel members to evolve a strategy in view of resources constraint and widening fiscal deficit.
In the approach paper to12th plan, the panel has set a cumulative growth target of 9 per cent in the next five years.
However, the latest developments including missing disinvestment target and increasing fiscal deficit have forced the panel to re-think its strategy.
The meeting occurs when the Finance Ministry’s plan to contain fiscal deficit through disinvestment in PSUs didn’t materialise on Wednesday.
The Cabinet on Wednesday deferred the proposal of Disinvestment Department to raise Rs 40,000 crore from divestment of PSUs through buyback and other modes.
As the market conditions are not conducive for disinvestment through public offer, the Finance Ministry had proposed to raise funds through buyback and cross holding among PSUs.
Sources in the panel said that the meeting is called to conclude the plan approach at least for the next two years, which may see thrifty allocations.
With an aim to use resources more efficiently, the panel will discuss the BK Chaturvedi report on rationalising Centrally Sponsored Schemes (CSS).
The report would come into implementation from this annual plan itself (2012-13), according to the sources. The report was approved by NDC. It rationalises CSS to 59 schemes from the current 147 schemes.
This will help the panel in manoeuvring funds. The meeting will also discuss how to generate new avenues of resources to contain fiscal deficit in the upcoming budget ahead. After this, later in the day, Ahluwalia will meet the Union Finance Minister Pranab Mukherjee to hold consultations with him for the upcoming budget.
The Government has very limited resources considering the slowing growth and increasing fiscal deficit. It had targeted to reduce the fiscal deficit to 4.6 per cent of GDP in current year.
However, on account of high subsidy and additional borrowing, it is expected to shoot beyond 5.5 per cent.
Recently, the panel in its communication to the central ministries had asked them to prepare their annual budget proposal for the FY2012-13 with an increase of 5 per cent over the current year.
The increase is to be in current price terms, including impact of inflation. It gave two more alternative scenarios at 10 per cent and 15 per cent increase over FY2011-12.
It is probably for the first time in the recent history that the plan panel has proposed a meager hike of 5 per cent. In a 5 per cent increase scenario, it would be very difficult to attain the target of 9 per cent in the 12th plan.
Highlights
- The Plan Panel is holding a meeting of its think-tank regarding its strategy to approach 12th five year plan (2012-17) today.
- In the approach paper to12th plan, the panel has set a cumulative growth target of 9 per cent in the next five years.
- However, the latest developments including missing disinvestment target and increasing fiscal deficit have forced the panel to re-think its strategy.
- The meeting occurs when the Finance Ministry’s plan to contain fiscal deficit through disinvestment in PSUs didn’t materialise on Wednesday.
- After the meeting, later in the day, Ahluwalia will meet the Union Finance Minister Pranab Mukherjee to hold consultations with him for the upcoming budget.
