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States may be allowed to use NSSF for Externally Aided Projects

Written by: Staff

New Delhi, Feb 23 (UNI) Finance Minister P Chidambaram is likely to announce in his Budget 2006-07 a proposal allowing States to utilise National Small Savings Funds (NSSF) for financing projects earmarked for Externally Aided Projects (EAP).

The bailout is being considered necessary because of the constraints of providing funds by the Finance Ministry and Planning Commission regarding total allocations to the States and the Centre.

Informed sources say with the total Gross Budgetary Support (GBS) fixed at only Rs 1,71,000 crores for the next fiscal, the Finance Ministry has not allocated any funds for EAPs, which are mainly funded from Budgetary Support and estimated at Rs 5,000 crores.These are proposals which are in an advanced stage of clearence.

The saga of fixing the GBS and Budget Estimates started much earlier this year as compared to yesteryears. Parleys in this regard started in mid-October with differences being wide in the requirements estimated by the concerned Ministries, the Planning Commission and the Finance Ministry.

The sources said in October the Finance Minister indicated that not more than a 15 per cent increase was possible in the GBS. This put the Planning Commission on alert as it felt a much higher Budgetary support was needed in view of the funding requirements given the thrust of the National Common Minimum Programme (NCMP) on mammoth social sector projects.

An internal exercise brought out that the Ministries had pitched for a GBS of Rs 2,13,000 crores.


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