The Hindu : Tamil Nadu / Chennai News : Finding resources for enhanced plan expenditure tough: expert

Online edition of India's National Newspaper
Tuesday, Jan 17, 2006

Tamil Nadu

Tamil Nadu - Chennai

Finding resources for enhanced plan expenditure tough: expert

Staff Reporter

"This is because revenue collections have fallen short of targets"

FOCUS ON ECONOMY: S. Mahalingam, managing trustee, Palkhivala Foundation (left), with S. Narayan, former Economic Adviser, and S. Ram, member, governing council, Palkhivala Foundation, at a function in Chennai on Monday. — Photo: K. V. Sriniv asan

CHENNAI: The element of desperation evident in last year's Budget to find resources for meeting the enhanced plan expenditure will be there in the 2006-07 Budget too, according to former economic adviser in the Prime Minister's Office S.Narayan.

This is because revenue collections have fallen short of targets, he said, delivering a lecture, on `Fiscal prudence and public expenditure,' organised by the Palkhivala Foundation here on Monday. The additional resources were required as the Centre was, since 2004, directly implementing social development programmes such as the one to promote literacy, earlier managed by States.

An increase in public expenditure was necessary to achieve inclusive growth, one of the aims of the National Common Minimum Programme.

"Forget fiscal deficit"

Pointing out that the answer to disenchantment (of the marginalised) lay in development, Mr. Narayan, who held various posts at the Centre, including that of Finance Secretary, said, "Forget fiscal deficit for a while and go for public expenditure."

The enhanced public expenditure, however, should be supported by an administration with the ability to deliver.

It was not enough providing the money. It must be ensured that those down the line (in the administration) were able to convert the resources to the benefit of the target group.

Noting that the country's economy and per capita income continued to grow in the face of various shocks, including financial and oil, he said the per capita income was expected to touch $1,000 by the end of the decade.

The rising per capita income would usher in "dramatic changes" in the economy and the services sector.

Huge disparity

But growth was not broad-based across the country and among sections of society.

The disparity between the rich and poor States was huge. Even in the rich States, income disparities between the rich and the poor were increasing.

Managing trustee of the Foundation S. Mahalingam and member of its governing council S. Ram spoke.

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