The Hindu Business Line : Plan panel voices concern over sources of financing for TN Plan

THE Planning Commission has voiced serious concern over the sources of financing the State Plan of Tamil Nadu in the Ninth Plan (1997-2002), which underwent "a significant change" in the quinquennium.

Sources in Yojana Bhavan told Business Line here that the significant change included "a massive deterioration in the own funds of the State." There is also a shortfall in realisation of Central assistance mainly due to shortfall in realisation of additional Central assistance for externally aided projects. Besides, the realisation of borrowings far exceeds Ninth Plan projections.

Although the State Government has got a higher Plan allocation for the inaugural year of the Tenth Plan at Rs 5,750 crore and for the whole of the Tenth Plan at Rs 40,000 crore, its performance during the Ninth Plan "leaves a lot to be desired," the sources noted.

For instance, against the State's own funds, which were pegged at Rs 2,956.15 crore for the Ninth Plan, the actual realisation at 1996-97 prices were minus Rs 8,292.46 crore. Again, total borrowings, which were projected at Rs 12,055.94 crore for the five-year period, had shot up to a whopping Rs 22,785.58 crore.

Central assistance, which was projected at Rs 9,987.91 crore, fell short and amounted to Rs 6,015.04 crore. All put together, against the envisaged outlay of Rs 25,000 crore for the Ninth Plan, the actual realisation amounted to Rs 20,508.15 crore, which was a realisation of 82 per cent of the Ninth Plan projections.

The sources noted that deterioration was "visible" in the Balance from Current Revenue (BCR). The realisation of BCR is high negative number and is 151.3 per cent of the projections. This is due to shortfall in realisation of share in Central taxes, which has, in turn, led to shortfall in realisation of non-Plan revenue receipts. The sources hastened to add that the realisation of the Non-Plan revenue expenditure far exceeded the Ninth Plan projections and the net effect of both was visible in the realisation of BCR.

The sources further pointed out that tax to net state domestic product (NSDP) ratio of Tamil Nadu has fallen marginally from 9.3 per cent in 1993-94 to 9.27 per cent in 1999-2000.

Salary, pension and interest payment as a percentage of total revenue receipt of Tamil Nadu in 1997-98 was 64.7 per cent and this was projected to be 71 per cent in 2002-03. "This growth needs to be contained to ensure sustainable fiscal situation," the sources added.

As the role of State's own fund for financing the Plan continues to be negative in the Tenth Plan projections too, the Plan panel has prescribed some policy suggestions for the State.

These include, among others, significant hike in user charges on public services need over the prevailing levels so as to cover the current costs and the need for accommodating pension liabilities within the Corpus of Pension Fund.

It also said the net borrowings by the State should be derived from sustainable level of debt as suggested in the medium-term fiscal policy signed by the State with the Department of Expenditure in the Ministry of Finance.

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Plan panel voices concern over sources of financing for TN Plan