The Hindu : Front Page : Rs.35,000-crore Plan size proposed

Online edition of India's National Newspaper
Friday, Sep 01, 2006

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Front Page

Rs.35,000-crore Plan size proposed

Special Correspondent

THIRUVANANTHAPURAM: The draft approach paper for Kerala's Eleventh Five-Year Plan, prepared by the State Planning Board, says that it will be well within the State's capacity to take its plan size to Rs.35,000 crore at 2006-07 prices during the five-year period from 2006-07 to 2011-12.

This is around 50 per cent higher in real terms than the actual size of the Tenth Five-Year Plan, which will end with this financial year. The Tenth Plan outlay was projected to be in the region of Rs.24,000 crore at 2001-02 prices, but the actual outlay in current prices for the first four years of the five-year period came to only Rs.16,105.44 crore.

The Tenth Plan is set to finish with a substantial shortfall in outlay and the achievement is likely to reach only about three-quarters of the projected total outlay in real terms.

`Fiscal conservatism'

The paper says that `fiscal conservatism' followed in the State so far during the Tenth Plan period is one of the main reasons for the plan underachievement.

It is true that non-plan expenditures had forged ahead. Expenditure at current prices on interest payments, salaries and pensions exceeded the Tenth Plan projections at 2001-02 prices by Rs.22,868 crore. This expenditure over-run on the non-plan side cannot fully explain the shortfall in plan outlay.

Nor can the State's tax collection efforts be faulted. Against a Tenth Plan projection of Rs.31,577.68 crore of own tax revenue at 2001-02 prices, the actual collections at current prices are likely to exceed Rs.45,000 crore when the five-year period ends this financial year.

Even with the non-plan expenditure increases, "Kerala could still have had a much larger plan [during the Tenth Plan period], close to what was projected, if the Government had not followed a deliberate policy of plan expenditure deflation," the paper says.

The State should have borrowed more to sustain its plan programmes. The Government chose to reduce its borrowings well below the amount envisaged under the Tenth Plan projections at the cost of plan implementation.

"If such fiscal conservatism is eschewed (as it must be) and if tax mobilisation effort can be maintained at a reasonable level, then the Eleventh Plan can witness a sizeable increase in plan outlay, even in the absence of any increase in Central assistance or external assistance," the paper says.

It also explains the basic assumptions it had followed while coming to the conclusion why it is not difficult for the State to increase the plan size to Rs.35,000 crore during the Eleventh Plan.

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