Planning Commission to continue schemes below Rs 300 crore, nixes finmin’s proposal

NEW DELHI: The Planning Commission has shot down a finance ministry proposal to discontinue all centrally sponsored schemes with allocation of less than Rs 300 crore from the next financial year, which could upset ministry’s calculations as it gets down to the task of preparing the budget for the next financial year.


The finance ministry has prepared a five-year fiscal consolidation plan that requires it to lower the fiscal deficit to 4.8% of GDP next financial year.

The Planning Commission has favoured a more gradual approach to rationalisation of the 147 central social sector schemes on which government had budgeted a spend of Rs 1.8 lakh crore last year, and has suggested that the exercise be spread over next two financial years and some schemes with smaller allocations should be retained.

"There are schemes that have been put in place in line with India’s global commitments or for a very specific requirement... You don’t have to do everything at one go and this rationalisation can be done over a period," said a senior official.

Some of the schemes having an outlay below Rs 300 crore need to be retained under an umbrella scheme as suggested by the expert panel, the official said.

A Plan panel appointed committee headed by member BK Chaturvedi had suggested rationalisation of schemes to bring them down to 59 as against 147 now, which is expected to enhance their flexibility, scale and efficiency.

According to the panel 44% of the total CSS have an average annual outlay of less than Rs 100 crore and had admitted that many of them were ineffective.

"CSS with small outlays do not achieve the objective of making an impact across the states.... These schemes should either be weeded out or merged for convergence with larger sectoral schemes or be transferred to states, who can then continue with these schemes based on their requirements," the panel had said.

The Plan Commission is in favour of the rationalization suggested by the BK Chaturvedi panel, but has conveyed to the finance ministry that the process should not be abrupt and be completed by 2015.

The 12th plan has also proposed that the rationalization exercise should begin only from next fiscal.

The Commission’s opposition to the restructuring may make it difficult for finance minister P Chidambaram to deliver a fiscally responsible budget that includes a reduction in fiscal deficit to 4.8% of GDP.

Chidambaram has proposed a five year fiscal consolidation plan that proposes to restrict fiscal deficit to 5.3% in 2012-13 and bring it down to 3% by 2016-17, and a cut in plan spending is likely to be a crucial element of the strategy.