NEW DELHI: Ahead of the approval of the Mid-Term Appraisal (MTA) of the Tenth Plan by the National Development Council (NDC) this month-end, the Planning Commission on Wednesday unveiled the severe resource constraints and other dismal ground realities that stand in the way of completion of programmes under the Plan.

Significantly, the Plan outlays were lower by about two per cent of the gross domestic product (GDP) of both the Centre and the States.

Apprising the Governors of the dismal situation through a presentation at a two-day conference here, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia pointed out that neither the Centre nor the States had been able to mobilise the resources required for completion of the programmes under the Tenth Plan. "Taking the Centre and the States together, Plan outlays are lower than expected by two per cent of GDP," he said and noted that this led to significant under-funding in many sectors.

Pointing to the poor financial health of the States, Dr. Ahluwalia said that 59 per cent of the core Plan resources was expected to be raised by borrowings. Instead, the dependence on borrowings went up to 73 per cent. "This was because balance from current revenue, which was targeted at minus 0.11 per cent of the GDP [average], has been on average around minus 0.88 per cent. However, it is improving."

Elaborating on the fall-out of the recommendations of the Twelfth Finance Commission (TFC), Dr. Ahluwalia said the increase in transfers, tax shares and internal reforms following the TFC suggestions would produce revenue surpluses in some States. In spite of this, the "debt burden continues to be high and interest payments are around 25 per cent of total tax revenue receipts of States."

Making out a case for power sector reforms and other mid-term policy initiatives suggested in the MTA, he said: "Achievement of targets by the States will depend crucially upon improvements in the budgetary position and improvements in power sector losses."

On the infrastructure front, he picked up the power sector and said the situation continued to be "worrisome." To rectify the situation and bring the sector back on track, he emphasised the need for tariff rationalisation, restriction of subsidies to target groups and introduction of competition and open access for attracting investment.

As for the other ongoing projects, he said a total of Rs. 91,000 crores was required to complete the 388 projects in the agriculture sector .

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