Friday, May 18, 2012

Governmentt needs to find balance between expenditures and revenues

The Indian government is facing tough situation. It is finding it difficult to bring the fiscal deficit under control. And now the planning commission of India has asked for a huge 132% rise in the gross budgetary support (GBS) for the 12th Five-Year Plan. The GBS is the amount of funds the centre is required to allocate to meet the plan expenditure. The responsibility of distributing GBS among ministries, departments and state governments rests with the Planning Commission. The plan panel has also sought a significantly higher allocation for the food ministry. This would enable it to prepare for implementing the food security law in the next fiscal. It could further inflate the subsidy bill. It has also sought higher allocation for education, tribal affairs and water sectors. However, the Finance Ministry is not willing to agree on such a hefty hike. This is due to their strained financial positions. The government and the planning commission need to find a balance between expenditures and revenues in order to ease the fiscal pressure. 

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