Financing the 12th Five Year Plan (2012 - 2017)

FINANCING THE 12FINANCING THE 12FINANCING THE 12FINANCING THE 12THTHTHTH FIVE YEAR PLAN FIVE YEAR PLAN FIVE YEAR PLAN FIVE YEAR PLAN

(2012 (2012 (2012 (2012 –––– 17)17)17)17)

Resources of the Centre for 11th Plan

�Resources Projected for the 11th Plan (at 2006-07 prices):

oGBS `1421711 crore

oCentral Assistance to States/UTs ̀ 324851 crore

oResources of CPSEs `1059711 crore

oCentral Plan Outlay `2156571

�Financing of the 11th Plan-Centre :

(A) GBS to Central Plan (`1096860 crore)

oBCR 46%

oBorrowing 54%

(B) IEBR of `1059711 crore

during the 11 Plan (2007-12) (` crore at 2006-07 prices)

Financial Projection & Realization: Centre during the 11th Plan (2007-12) (` crore at 2006-07 prices)

Sources of Funding Projection Realization % Achievement

BCR 653989 -177679 -27.17

Borrowings including net MCR 767722 1381639 179.97

Net Flow from abroad 0 64563

GBS for Plan 1421711 1268523 89.23

CA to States/UTs’ Plan 324851 338913 104.33

GBS for Central Plan 1096860 929610 84.75

Resources of PSEs 1059711 684272 64.57

Central Plan Outlay 2156571 1613882 74.84

Achievement of the 11th plan - Centre: Realization vis-à-vis Projection (` crore at 2006-07 prices)

Achievement of the 11th plan - Centre: Realization vis-à-vis Projection (` crore at 2006-07 prices)

653989

767722

0

1421711

324851

1096860

1059711

2156571

-177679

1381639

64563

1268523

338913

929610

684272

1613882

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

11th Plan Realization

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 State’s Own Resources `1163296 crore

oResources of SPSEs `128824 crore (included in SOR)

oCentral Assistance to States/UTs ̀ 324851 crore

oAggregate Plan resources `1488147 crore

�Financing of the 11th Plan-States/UTs:

oBCR 25.87%

oBorrowing 43.64%

oCentral 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%

� State’s 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 Projection Realization % Achievement

Balance from current revenues 385050 274400 71.26

Resources of PSEs 128824 134234 104.2

Borrowings including net MCR 649422 600295 92.44

State’s own resources 1163296 1008929 86.73

CA to States’ and UTs’ Plan 324851 338913 104.33

Aggregate plan resources 1488147 1347842 90.57

GBS to Plan 1359323 1213608 89.28

Achievement of the 11th plan - States/UTs: Realization vis-à-vis Projection (` crore at 2006-07 prices)

385050

128824

649422

1163296

324851

1488147

1359323

274400

134234

600295

1008929

338913

1347842

1213608

Balance from current revenues

Resources of PSEs

Borrowings including net MCR

State’s own resources

CA to States’ and UTs’ Plan

Aggregate plan resources

GBS to Plan

11th Plan Realization

Realisation Projection

Challenges for Financing the 12th Plan

Sustaining high economic growth is crucial for

�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 2007–08 to 5.89 per cent in 2011–12 (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 2007–08 to 8.09 per cent in 2011–12 (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

2.54

5.99

6.48

4.87

5.89

1.49

2.26

3.02

2.15 2.21

3.97

8.17

9.46

6.99

8.09

0

1

2

3

4

5

6

7

8

9

10

2007–08 2008–09 2009–10 2010–11 2011–12 (RE)

Centre States Combined


� Non-Plan expenditure has also been increasing steadily as � Non-Plan expenditure has also been increasing steadily as percent of GDP

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.

NPRE and its components (as percent of GDP)

Items 2007–08 2011–12 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


�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:

oAverage economic growth of 14.8% per annum.

oFiscal deficit to decline from 5.1% of GDP in

2012-13 to 3.0% in 2016-17.

oNet Tax revenue to increase from 7.6% of GDP in

2012-13 to 8.79% in 2016-17.

oSubsidies to decline from 2.44% of GDP in 2011-

12 (RE) to 1.5% in 2016-17.

(at current prices)

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)

Sources of Funding Projection

BCR 1387371

Borrowings including net MCR 2181255

GBS to Plan 3568626

CA to States and UTs’ Plan 857786

GBS for Central Plan 2710840

Resources of PSEs including Borrowed Resource 1622899

Total Resources for Central Plan 4333739

Public Sector resources for 12th Plan – States/UTs (at current prices)

Public Sector resources for 12th Plan – States/UTs (at current prices)

� The Aggregate Plan resources: `3716385 crore

� States/UT’s own resources: `2858599 crore

� Central Assistance: `857786 crore

12th Plan resources of States/UTs (at current prices) (` crore)

Sources of Funding State UTs Total

Balance from Current Revenues 885939 74040 959979

Resources of PSEs 376043 4276 380319

Borrowings 1494258 24043 1518301

State’s Own Resources 2756240 102359 2858599

CA to States’ and UTs’ Plan 816083 41703 857786

Aggregate Plan Resources 3572323 144062 3716385

Overall Financing Pattern

Overall Financing Pattern: 11th and 12th plan (at current prices) (` crore)

Sources of Funding 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) – – –

Centre’s 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)

State’s 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

(`

CA to

States/UTs’

Plan

27%

GBS for

Central Plan

73%

GBS distribution between Central

and State Plan: 11th plan

Gross Budgetary Support 3568626

CA to States/UTs’ Plan 857786


Gross Budgetary Support 1589344

CA to States/UTs’ Plan 421458


CA to

States/UTs’

Plan

24%

GBS for

Central

Plan

76%

GBS distribution between Central

and State Plan: 12th plan

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 Centre’s GBS is provided for Health and Child

Development, Urban Development and Education.

Allocation of Centre’s GBS by Major Sectors (at current prices) (` crore)

Major Sectors 11th Plan

Realization

12th Plan

Projection

% Increase over

11th Plan

Agriculture and Water Resources 116554 284030 143.69

Rural Development and Panchayati Raj 397524 673034 69.31

Scientific Departments 58690 142167 142.23

Transport and Energy 204076 448736 119.89

Education 177538 453728 155.57

Health and Child Development 112646 408521 262.66

Urban Development 63465 164078 158.53

Others 458849 994333 116.7

Total Plan Allocation 1589342 3568626 124.53

Sectoral allocation of Central Plan Outlay

Agriculture&

Allied Activities

3%

Rural

Development

9%

Special Area

Programmes

0%

Irrigation &

Flood

Control

0%

Energy

25%

Industry&

Minerals

7% Transport

20%

Communication

s

3% Science,Technol

ogy &

Environment

3%

Economic

Services

2%

Social Services

27%

General

Services

1%

11th Plan Agriculture&

Allied

Activities

3% Rural

Development

6%

Special Area

Programmes

0%

Irrigation &

Flood Control

0%

Energy

25%

Industry&

Minerals

7%

Transport

19%

Communicatio

ns

2%

Science,Techn

ology &

Environment

3%

Economic

Services

4%

Social Services

30%

General

Services

1%

12th Plan

Sectoral allocation of States/UTs Plan

Agriculture&

Allied Activities

6%

Rural

Development

6%

Special Area

Programmes

3%

Irrigation &

Flood Control

14%

Energy

11%

Industry&

Minerals

2%

Transport

12%

Communicatio

ns

0%

Science,Techn

ology &

Environment

1%

Economic

Services

3%

Social Services

39%

General

Services

3%

11th Plan

Agriculture&

Allied Activities

7%

Rural

Development

6%

Special Area

Programmes

2%

Irrigation &

Flood Control

12%

Energy

11%

Industry&

Minerals

2%

Transport

11%

Com

munic

ations

0%

Science,Techn

ology &

Environment

1%

Economic

Services

4%

Social Services

42%

General

Services

2%

12th Plan

Sectoral allocation of 12th Plan (Centre & States)

Agriculture &

Allied Activities

4% Rural

Development

8%

Special Area

Programmes

1%

Irrigation &

Flood Control

6%

Energy

19%

Industry&

Minerals

5%

Transport

17%

Communicatio

ns

2%

Science,Techn

ology &

Environment

2%

Economic

Services

2%

Social Services

33%

General

Services

1%

11th Plan

Agriculture

& Allied

Activities

5%

Rural

Development

6%

Special Area

Programmes

1% Irrigation &

Flood Control

5%

Energy

19%

Industry&

Minerals

5%

Transport

16%

Communicatio

ns

1%

Science,Techn

ology &

Environment

2%

Economic

Services

4%

Social Services

35%

General

Services

1%

12th Plan