FINANCING THE 12TH FIVE YEAR PLAN (2012 17)

Resources of the Centre for 11th Plan

Resources Projected for the 11th Plan (at 2006-07 prices):
o GBS `1421711 crore o Central Assistance to States/UTs `324851 crore o Resources of CPSEs `1059711 crore o Central Plan Outlay `2156571

Financing of the 11th Plan-Centre :

(A) GBS to Central Plan (`1096860 crore) o BCR 46% o Borrowing 54% (B) IEBR of `1059711 crore

Financial Projection & Realization: Centre

during the 11th Plan (2007-12) (` crore at 2006-07 prices)
Sources of Funding BCR Borrowings including net MCR Net Flow from abroad GBS for Plan CA to States/UTs Plan GBS for Central Plan Resources of PSEs Central Plan Outlay Projection Realization 653989 767722 0 1421711 324851 1096860 1059711 2156571 -177679 1381639 64563 1268523 338913 929610 684272 1613882 89.23 104.33 84.75 64.57 74.84 % Achievement -27.17 179.97

Achievement of the 11th plan - Centre:

Realization vis--vis Projection (` crore at 2006-07 prices)
11th Plan Realization
Central Plan Outlay Resources of PSEs GBS for Central Plan CA to States/UTs Plan GBS for Plan Net Flow from abroad Borrowings including net MCR* -177679 BCR 64563 0 1381639 767722 653989 338913 324851 1268523 1421711 684272 1059711 929610 1096860 1613882 2156571

Realization

Projection

Achievement in the 11th Plan - Centre

(Revenue receipt in the 11th Plan) As a percent of GDP revenue receipt, GTR, Net TR & NTR declined significantly between 2007-08 & 2011-12.
o Revenue receipt declined by 2.2 percent point from 10.87% in 2007-08 to 8.66% in 2011-12. o GTR declined by about 1.71 percent point. o Net-TR declined by 1.56 percent point from 8.81% in 2007-08 to 7.25% in 2011-12. o NTR declined by 0.6 percent point from 2.05% in 2007-08 to 1.41% in 2011-12.

Reasons for decline in NTR: (i) debt-consolidation and resetting of interest rate and (ii) disintermediation of the Centre in borrowing.

Achievement in the 11th Plan - Centre

Non-plan Revenue Expenditure (NPRE) increased by 0.77 percent point of GDP from 8.44% in 2007-08 to 9.21% in 2011-12 due to
o Increase in Salary due to 6th pay commission o Increase in Subsidy expenditure o Fiscal concession and stimulus package

Shortfall in aggregate non-debt resources and increase in NPRE led to Negative BCR
As a result, Borrowing including net MCR was 109% of the GBS for 11th Plan.

Resources of the States/UTs for 11th Plan

Resources Projected for the 11th Plan (at 2006-07 prices):
o States Own Resources `1163296 crore o Resources of SPSEs `128824 crore (included in SOR) o Central Assistance to States/UTs `324851 crore o Aggregate Plan resources `1488147 crore

Financing of the 11th Plan-States/UTs:

o BCR 25.87% o Borrowing 43.64% o Central assistance 21.83% o SPSE 8.66%

Achievement in the 11th Plan States/UTs

Achievement of the States/UTs by 90.57% BCR realized by 71.26% IEBR of SPSEs exceeded the target by 4.2% Borrowing restricted to 92.44% States Own tax revenue increased due to Tax reforms such as VAT Share in Central Tax improved due to enhanced share recommended by 13th FC Non-plan expenditure was higher than projected due to impact of 6th Play commission

Financial Projection & Realization: States/UTs

during the 11th Plan (2007-12) (` crore at 2006-07 prices)
Sources of Funding Balance from current revenues Resources of PSEs Borrowings including net MCR States own resources CA to States and UTs Plan Aggregate plan resources GBS to Plan Projection 385050 128824 649422 1163296 324851 1488147 1359323 Realization 274400 134234 600295 1008929 338913 1347842 1213608 % Achievement 71.26 104.2 92.44 86.73 104.33 90.57 89.28

Achievement of the 11th plan - States/UTs:

Realization vis--vis Projection (` crore at 2006-07 prices)
11th Plan Realization
GBS to Plan 1213608 1359323 1347842 1488147 338913 324851 1008929 1163296 600295 649422 134234 128824 274400 385050 Realisation Projection

Aggregate plan resources

CA to States and UTs Plan

States own resources

Borrowings including net MCR

Resources of PSEs

Balance from current revenues

Challenges for Financing the 12th Plan

Sustaining high economic growth is crucial for revenue buoyancy
o The economy to recover from recent slowdown o The economic growth declined from 9.3% in 2007-08 to 6.2% in 2011-12.

Fiscal deficit has increased continuously during the 11th Plan period.
o Fiscal deficit of the Centre, as a per cent of GDP, increased from 2.54 per cent in 200708 to 5.89 per cent in 201112 (RE). o Fiscal deficit of the States remained around 3% of GDP o Combined fiscal deficit (Centre and States) increased from 3.97 per cent in 200708 to 8.09 per cent in 201112 (RE). o Fiscal deficit of the Centre projected to decline to 3% of GDP by 2016-17 and combined deficit to within 6% of GDP.

Fiscal deficit as per cent to GDP during the 11th Plan

10 9.46 9 8 7 6 5.99 5 4 3 2.54 2 1 0 200708 200809 Centre 200910 States 201011 201112 (RE) Combined 1.49 2.26 2.15 4.87 3.97 3.02 2.21 8.17 6.48 6.99 5.89 8.09

Challenges for Financing the 12th Plan

Non-Plan expenditure has also been increasing steadily as percent of GDP NPRE and its components (as percent of GDP) Items 200708 201112 RE Interest 3.43 3.11 Pension 0.49 0.63 Salary 0.89 1.13 Subsidies 1.42 2.44 Other NPRE 2.21 1.9 (Total) NPRE 8.44 9.21
o The increase in pension and salary has been due to 6th pay Commission award. o There is an urgent need to rationalize the subsidy through necessary reforms to release resources for plan expenditure.

Challenges for Financing the 12th Plan

Resources for Plan being residual must come either from increased resource mobilization or reduction in non-plan expenditure. With FD target declining, the availability of debt resources will also get reduced. So, for making the required resources available, we need to have higher economic growth for good tax buoyancy, containment of non-plan expenditure including subsidies and adequate IEBR.

Public Sector resources for 12th Plan - Centre

The resource projection for the 12th plan assumes the following: o Average economic growth of 14.8% per annum. o Fiscal deficit to decline from 5.1% of GDP in 2012-13 to 3.0% in 2016-17. o Net Tax revenue to increase from 7.6% of GDP in 2012-13 to 8.79% in 2016-17. o Subsidies to decline from 2.44% of GDP in 201112 (RE) to 1.5% in 2016-17.

Public Sector resources for 12th Plan Centre (at current prices)
GBS: `3568626 crore. CA to the States and UTs Plan: `857786 crore. IEBR of Central public sector enterprises (CPSEs): `1622899 crore. Central Plan outlay: `4333739 crore.
12th Plan resources of the Centre (at current prices) (` crore) Projection Sources of Funding BCR Borrowings including net MCR GBS to Plan CA to States and UTs Plan GBS for Central Plan Resources of PSEs including Borrowed Resource Total Resources for Central Plan 1387371 2181255 3568626 857786 2710840 1622899 4333739

Public Sector resources for 12th Plan States/UTs

(at current prices)
The Aggregate Plan resources: `3716385 crore States/UTs own resources: `2858599 crore Central Assistance: `857786 crore 12th Plan resources of States/UTs (at current prices) (` crore)
Sources of Funding Balance from Current Revenues Resources of PSEs Borrowings States Own Resources CA to States and UTs Plan Aggregate Plan Resources State 885939 376043 1494258 2756240 816083 3572323 UTs 74040 4276 24043 102359 41703 144062 Total 959979 380319 1518301 2858599 857786 3716385

Overall Financing Pattern

Overall Financing Pattern: 11th and 12th plan (at current prices) (` crore)
Eleventh Plan Realization Twelfth Plan Projection Centre States/UTs Total Centre States/UTs Total Balance from Current Revenues 242390 381536 139146 1387371 959979 2347350 (11.97) (22.11) (3.71) (32.01) (25.83) (29.16) Borrowings including net MCR 1751691 752815 2504506 2181255 1518301 3699556 (86.50) (43.62) (66.77) (50.33) (40.85) (45.96) Net Inflow from Abroad 80043 0.00 80043 (3.95) (2.13) Centres GBS 1589344 1589344 3568626 3568626 (78.48) (42.37) (82.35) (44.33) Resources of PSEs/Local Bodies 857244 170039 1027283 1622899 380319 2003218 (42.33) (9.85) (27.39) (37.45) (10.23) (24.88) States Own Resources 1304390 1304390 2858599 2858599 (75.58) (34.77) (76.92) (35.51) CA to States and UTs Plan 421458 421458 857786 857786 (20.81) (24.42) (19.79) (23.08) Resources of Public Sector Plan 2025130 1725848 3750978 4333739 3716385 8050123 Note: figures in parentheses are percentages of Resources of Public Sector Plan Sources of Funding

(`
Gross Budgetary Support CA to States/UTs Plan GBS for Central Plan 1589344 Gross Budgetary Support 421458 CA to States/UTs Plan 1167886 GBS for Central Plan 3568626 857786 2710840

GBS distribution between Central and State Plan: 11th plan

GBS distribution between Central and State Plan: 12th plan

CA to States/UTs Plan 24%

CA to States/UTs Plan 27%

GBS for Central Plan 73%

GBS for Central Plan 76%

Sectoral allocation of GBS

The GBS allocation of the Centre to major sectors has been made in tune with the approach adopted for the Twelfth Plan for faster, sustainable and inclusive growth. Twelfth Plan focuses on poverty reduction, ensuring access to basic physical infrastructure, health and education facilities to all. Biggest increase in allocation of Centres GBS is provided for Health and Child Development, Urban Development and Education.
Allocation of Centres GBS by Major Sectors (at current prices) (` crore)
Major Sectors 11th Plan Realization 12th Plan Projection % Increase over 11th Plan

Agriculture and Water Resources Rural Development and Panchayati Raj Scientific Departments Transport and Energy Education Health and Child Development Urban Development Others Total Plan Allocation

116554 397524 58690 204076 177538 112646 63465 458849 1589342

284030 673034 142167 448736 453728 408521 164078 994333 3568626

143.69 69.31 142.23 119.89 155.57 262.66 158.53 116.7 124.53

Sectoral allocation of Central Plan Outlay

11th Plan
General Services 1% Agriculture& Allied Activities 3% Special Area Programmes 0% Irrigation & Flood Control 0%

12th Plan
General Agriculture& Special Area Allied Services Programmes Activities 1% Rural 0% 3% Development Irrigation & 6% Flood Control 0%

Rural Development 9% Social Services 27%

Social Services 30% Energy 25% Energy 25%

Economic Services 2% Communication s 3% Science,Technol ogy & Environment 3% Transport 20%

Industry& Minerals 7%

Economic Services 4% Science,Techn ology & Environment 3% Communicatio ns 2% Transport 19%

Industry& Minerals 7%

Sectoral allocation of States/UTs Plan

11th Plan
Special Area Programmes Rural 3% Development 6% Irrigation & Flood Control 14% General Services 2%

12th Plan
Special Area Programmes Rural 2% Development 6% Irrigation & Flood Control 12% Energy 11% Industry& Minerals 2%

Agriculture& Allied Activities 6%

Agriculture& Allied Activities 7%

General Services 3%

Energy 11%

Social Services 39%

Transport 12% Industry& Minerals 2% Communicatio ns 0% Economic Services 3% Science,Techn ology & Environment 1% Social Services 42%

Transport 11%

Com munic ations Economic Services 0% 4% Science,Techn ology & Environment 1%

Sectoral allocation of 12th Plan (Centre & States)

11th Plan
Irrigation & Special Area Flood Control 6% Programmes 1% Agriculture & Allied Activities 4% Rural General Services 1% Development 8% Special Area Programmes 1% Rural Development 6% Agriculture & Allied Activities 5% General Services 1%

12th Plan
Irrigation & Flood Control 5% Energy 19% Industry& Minerals 5%

Energy 19% Industry& Minerals 5%

Transport 17% Social Services 33% Communicatio ns 2% Economic Services 2% Science,Techn ology & Environment 2% Social Services 35%

Transport 16%

Communicatio ns 1% Science,Techn ology & Economic Environment Services 2% 4%