Larger share for States expected in the Budget

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New Delhi, Feb 27 (UNI) There is widespread belief that the Budget to be presented by Finance Minister P Chidambaram on Friday will be State-friendly, with economists betting that Budgetary support to the State governments being larger than that of the Central Plan.

The main reason for this is the UPA government's commitment to increase agricultural production to four per cent per annum on a sustained basis to bridge the foodgrain deficit. Agriculture is a state subject.

Informed sources say the Gross Budgetary Support (GBS) to States, including additional Central Assistance, is likely to go up by as much as 23 per cent this year. A key factor would be additional funds of the order of Rs 4,000 crore being earmarked for Rashtriya Krishi Vikas Yojna, the first of its kind scheme with flexibility being given to State governments for evolving regional strategies for hiking yields of foodgrains.

Sources say the phenomneally higher allocation of GBS to States would also be on account of making available Rs 1,300 crores as special assistance to Jammmu and Kashmir for its power sector reforms.

The amount for this purpose was not included in the last year's GBS as it was assumed to be provided outside the Plan by the Finance Ministry. This year, for reasons of transparency, Rs 1,300 crore is to be included in the GBS from the beginning.

As the Central Plan is unlikely to go up beyond an increase of 15 per cent, the huge increase in funding to States will obliterate the complaints of these governments, especially those ruled by the non-UPA alliance, that the Union government was giving step motherly treatment to them.

Reports say that the total GBS will of the order of Rs 2,40,000 crores for the year 2008-09, with additional allocations of about Rs 10,000 crores being made if necesssary during the course of the year for certain critical sectors.

Economists say that these allocations are to be made without compromising on the demand of the Finance Ministry to contain the Budget deficit at acceptable levels and meeting the targets under the Fiscal Responsibility and Budget Management Act.

Sources said during the Annual Plan discussions most Chief Ministers expected a much higher level of grants under the Special Plan Assitance.

The Ministry of Finance has also emphasised the need for higher allocations for Accelerated Irrigation Benefit Programme(AIBP). A strong case has been made within the government for a higher level of funding in the next financial year.

The huge commitments for the flagship programmes of the UPA government relate to the development of social sectors. Education and health being State subjects, there will be higher accruals to State governments on this count too.

Source said various Ministeries of the Union government have formulated their proposals for the Annual Plan for 2008-09, which is far above the amount that can be given as GBS.

This is primarily on acount of increase in the size of programmes and introductioon of new schemes. These schemes cover social sector programmes like universalisation of old age pension for BPL families, higher coverage under Sarv Shiksha Abhiyan, Integerated Child Development Scheme (ICDS), National Health Insurance Programme, expansion of National Rural Employment Guarantee Act (NREGA) to cover the entire country and the decision to support secondary education with Central funding.

All in all, informed sources say, the Budget will aim to consolidate the Centre's initiatives in making development more inclusive. The idea is to help the Centre improve its Report card for the next General Elections.


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