The Telegraph
Since 1st March, 1999
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Tug of war over plan funds ends

New Delhi, Feb. 5: Two rounds of meeting between Prime Minister Atal Bihari Vajpayee and finance minister Jaswant Singh have resulted in a compromise formula for the Union budget’s largest spend — plan expenditure.

The Union Cabinet had sanctioned a budget of Rs 1,34,000 crore for all plan schemes, mostly spent on development and social sector projects. But Singh had written a note, slashing the budget to a mere Rs 1,02,000 crore. It is now understood that Singh has agreed to a compromise figure of Rs 1,17,000 crore.

The compromise was made possible after Vajpayee intervened in what was turning out to be a slugfest between Singh and his Cabinet colleagues, most of them heading social sector ministries.

Top officials in the Prime Minister’s Office (PMO) said the clincher meeting was held on Monday morning but as it was part of the budget-making exercise details were kept under wraps.

“The two also discussed various broad contours of the budget. In all, the Prime Minister had about five meetings with Singh on budget-related issues, especially the politics of this year’s budget.”

Vajpayee, who will lead the BJP to a general election next year and guide the party through nine state assembly elections this year, is particularly eager to see that the entire budget “gets a human face” that people can understand.

The Prime Minister is also trying to work out a compromise between the demand of the BJP party for dilution of harsh tax recommendations made by the Vijay Kelkar panel and the finance ministry’s desperate need to raise new resources.

Vajpayee is keen on poverty reduction measures, social welfare projects and schemes to reduce unemployment and retrench workers of sick private firms. He wants these schemes to be retained and pushed through on a war footing.

Normally plan schemes account for between 25 to 33 per cent of the total annual expenditure of the government. Economists have traditionally argued that the higher the plan spend, the higher the GDP growth and lower the poverty figures. But demands of subsidy expenditure, wages and salaries of a huge bureaucracy and interest payouts often mean cutbacks in plan spend.

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