Annual Report 1995-1996
1.1 The Government initiated a setofstabilisation-cum- structural adjustment measures in July, 1991 which are now referred to as the "economic reforms". The key objective of the stabilisation policy (which included reduction in fiscal deficit, containment of growth in money supply and an exchange rate adjustment) was to bring growth of aggregate demand more in line with the long term growth path of the economy and hence reduce the domestic inflation rate and improve the balance of payments situation. In conjunction with these stabilisation measures, the structural adjustment measures (which included industrial delicensing, decontrol of several administered prices, liberalisation of the policy regime governing international trade, technology transfer and foreign investment and deregulation of the financial sector including decontrol of interest rates )were aimed at improving the supply side of economy and hence improve the long term growth path of the economy itself.
1.2 More specifically, structural adjustment measures seek to both better allocate and utilise hational resources. It seeks to shift resources from the non-traded goods sector (which includes goods protected heavily against import) to the traded goods'sector and within the traded goods sector from import competing activities to export activities. Besides better interscctoral resource allocation, structural reform also seeks to improve resource utilisation by (a) increasing the openness of the economy and (b) changing the structure of incentives and institutions. Operationally it attempts to reduce State intervention to rely more on markets, dismantle controls to rely more on prices, and wind down the public sector where it is uneconomic and to rely more on the private sector to promote new activities. It should however be mentioned here that as regards the social sector, including education and health, which is characterised by large gap between the needs of the population and the availability of requisite services, and has limited ability to commandeer internal and extra budgetary resources (IEBR), budg-etary support has to be continued at substantial levels.
1.3 As part of the stabilisation program me, the fiscal deficit of the Central Government has been reduced from 8.3 percent ofGDP in 1990-91 to a target of 5.5 percent ofGDP for 1995-96. The rupee was first devalued in June 1991 by about 20 percent and subsequently the rupee has been made convertible ort the current account. The adjustment in the exchange rate has been accompanied by substantial trade liberalisation and a reduction in the tariffs. At present, except for a small negative list, all imports are out of the fold of import licensing. The maximum tariff rate which was over 300 percent in 1990-91 has now been scaled down to 50 percent in the 1995-96 Budget. As a result of the tariff cuts, the average tariff rate which was about 50 percent in 1990-91 has declined to 27 percent in 1995-96. As the Eighth Plan had argued, a calibrated and structured approach to achieving the objective of tarrif rationalisation is required. The trade liberalisation measures have also been accompanied by a freer foreign investment policy, deregulation of the domestic industry, decontrol of the administered prices and a number of financial sector reform measures. In the last three years the Government has also implemented a host of tax reform measures. In the field of direct taxes, the approach has been to reduce the high marginal tax rates while systematically expanding the tax base by bringing in potential income tax as-sessees into the tax net. In the sphere of indirect taxes, the effort has been to rationalise the rate structure and move towards a comprehensive Value - Added-Tax (VAT) system in the interests of neutrality as well as higher elasticity.
1.4 Many of the macro-economic problems that surfaced by the early 1990s originated from the persistent fiscal imbalance. Correcting the fiscal imbalance, therefore, formed the cornerstone of the stabilisation and structural adjustment programme initiated in July, 1991. The largest reduction in fiscal deficit was brought about in 1991-92 from 8.3 percent ofGDP to about 6 percent. However, the programme of deficit reduction could not be carried forward in the subsequent years with the same degree of consistency. The biggest slippage occurred in 1993-94. The Budget for 1993-94 had planned fora fiscal deficit of the Central Government of about 4.7 percent of GDP, down from 5.7% in the previous year. However, the year 1993-94 ended with a deficit of about 7.7 percent of GDP. The Budget for 1994-95 attempted to correct the 1993-94 fiscal imbalance by aiming for a fiscal deficit at a more realistic 6 percent of GDP. However, 1994-95 (RE) shows that fiscal deficithas again moved upwards to about 6.8 percent of GDP. The Budget for 1995-96 plans for a fiscal deficit of about 5.5 percent of GDP.
1.5 The Eighth Plan has argued and it is important to reiterate that it is necessary to keep a check on revenue deficit. As against an average of 1.1 percent of GDP during the Sixth Plan years and an average of 2.6 percent GDP during the Seventh Plan years the revenue deficit during the first three years of the Eighth Plan averaged 3.5 per cent of GDP. This calls for corrective measures, both to bolster the lax and non- tax revenues, as well as controlling current expenditure. It is important to emphasise that in the interests of fiscal discipline while it is necessary to keep a check on fiscal deficit, this has had the effect of curbing capital expenditure by the Central Government which has gone down from 5.9 percent of GDP in 1990-91 to 3.4 percent of GDP as in 1995-96(BE). Though it is recognised that budgetary classification of capital expenditure does not necessarily mean expenditure for capital formation, a good part of capital expenditure can be identified as investment expenditure. Thus the long run adverse effects of a decline in the share of capital expenditure in GDP, on'capital formation and sustained growth prospects for the economy as a whole need hardly be overemphasised.
1.6 As regards tax revenues, even though there have been significant gains owing to reforms in the structure of direct and indirect taxes, the gross tax revenue to GDP ratio has declined from 11.3 percent in 1987-88 and 10.8 percent in 1990-91 to 9.8 percent in 1995-96(BE). The strategy of moderate rates on a wider base and bctlcrtax administration in the field of direct taxes has on the whole paid dividends in the form of higher level of collection. As a percentage of GDP personal income tax collection is likely to increase from 1 percent in 1990-91 to 1.3 percent in 1995-96(BE). Similarly, corporate tax is likely to increase from 1 percent GDP to 1.5 percent in 1995-96 (BE). In the sphere of indirect taxes the complex system of high and multiple rates with numerous exemptions has been replaced by a simpler and rationalised tax structure with moderate rates. However, the ratio of indirect tax to GDP has come down significantly, especially in respect of customs duties.
1.7 Following the initiation of the stabilisation and structural adjustment measures, the rate of growth of GDP decelerated significantly. During the Seventh Plan period, GDP had grown at about 6 percent annually and in the first year of the current decade it had grown by over 5 percent. In 1991-92, the first year of the reforms, GDP grew by only about 1 percent. However, the economy soon absorbed the initial shock of the reform measures and responded quickly and positively to the policy initiatives. The rate of growth of GDP progressively recovered from about 1 percent in 1991-92 to 6.3 in 1994-95 and possibly 6.2 percent in 1995-96 as per the latest estimates ofCSO.
1.8 Recovery of GDP has been possible due to successive good performance of the agricultural sector during the last three years (1992-95). Due to successive good monsoons agricultural production and value added from agriculture, have recorded about 3 and 3.5 percent annual gro\vth during the last three years. Foodgrains production increased steadily from about 168 million tonnes in 1991-92 to around 191.1 million tonnes in 1994-95. The country had public stock of foodgrains of 34.7 million tonnes as in July 1995 to take care of any weather induced fluctuations.
1.9 The process of industrial recovery'that started in 199/-93 and continued through the last two years helped put the economy on a higher growth path during 1994-95. Production in the manufacturing sector has progressively recovered by growing at 2.2 percent in 1992-93, 5.3 percent in 1993-94 and by about 9 percent during 1994-95. The strongest recovery has occurred in capital goods sector, which suffered a severe decline of about 9 percent during 1991-92. After declining continuously during 1992-93 and 1993-94, capital goods production recorded agrowthof25 percent during 1994-95. Reflecting the sustained recovery in industrial production during the last three years, industrial GDP has witnessed an average annual growth of 5.8 percent during 1992-95.
i 10 In contrast to the industrial sector, the service sector contin-cd to grow even during the height of recession. The service sector, consisting of trade, transport, finance and insurance and community and social services, has grown by an annual average rate of about 5.7 percent during the last three years. The service sector which presently accounts for over 40 percent of GDP has been instrumental in contributing substantially to the GDP during periods of decline in production in other sectors.
1.11 In the ultimate analysis, the growth performance of an economy depends to a great extent on the trends in savings and investment. From 1990-91 domestic savings as a percentage of GDP have come down significantly from about 23 percent in 1991-92 to about 21.4 percent in 1993-94 as per provisional esitmates of C.S.O. Public sector savings have also experienced substantial decline mainly due to increase in deficits in Government Administration. This has been on account of a decline in Public Sector savings rate from 2.1 percent to 0.5 percent and a decline of household sector savings from 17.8 percent to 17.4 percent. Over the same period, the private corporate savings have risen from 3.2 percent to 3.5 percent. Thus the decline in gross domestic savings rate in 1993-94 has largely been on account of deterioration of Government finances. Notwithstanding this decline, the quick estimates for 1994-95 show an encouraging sign . The gross domestic savings rate is estimated at 24.4 percent with each of the three sectors namely, the household sector, the private corporate sector and the public sector registering an improvement over their respective performance in 1993-94.
1.12 After the decline in 1991-92, domestic investment recovered somewhat in the very next year because of continued buoyancy in private corporate sector investment. However, due to sluggish growth in investment by the household sector during 1992-93 (4.9%) and sharp decline in 1993-94 (-12.7%) gross domestic investment has again shown a decline of about 2.6 percent in 1993-94. There are several indications to suggest that investment activity, especially in the industrial sector, has revived during 1994-95 . First, production of capital goods has increased by 25 percent as compared to a decline of 4.2 percent in 1993-94. Second, import of capital goods has experienced a growth of over 18 percent in 1994-95 over and above a growth of about 3 8 percent in 1993-94. Third, primary issues of capital as per some estimates has exceeded
Rs.40,000 crore during 1994-95 as compared to about Rs.22000 crore fn 1993-94. Fourth, disbursements of financial assistance by All India Financial Institutions has grown by over 24 percent during 1994-95 ascomparcd to about 15 pcrcentin 1993-94. These trends are supported by quick estimates of investment made by the C.S.O. which places the investment rate in 1994-95 as 24.9 per cent ; a substantial increase above the 1993-94 estimate of 20.6 percent.
1.13 Since the reforms were initialed, the country has been able to tide over the balance of payments crisis that erupted in early 1991. The balance of payments situation and the foreign exchange reserves position have improved considerably in the last three years. The current account deficit which was about $10 billion in 1990-91 has come down to $ 2.3 billion in 1994-95. As percentage of GDP, it has declined from 3.2 in 1990.91to0.8in 1994-95. The improvement in the current account balance has also been accompanied by a major turn-around on capital account. There has been a surge in capital in flows, especially in (he form of foreign portfolio investment in recent years. Coupled with declining current account deficit, the surge in capital inflows has led to a substantial build up of foreign exchange reserves, which increased from about $2 billion in end 1990-91 to over ^21 billion by the end of 1994-95.
1.14 Most of the improvement in the current account deficit is accounted for by I'm proved trade balance. Trade deficit (RBI Data) as a percentage of GDP which was 3.2 in 1990-91 has declined to about 1.5 by 1994-95. This improvement in the trade balance is entirely due to improved export performance. Exports as a percentage of GDP which was about 5 percent during the Seventh Plan period and 6.2 percent in 1990-91 has consistently increased to about 9 percent in 1994-95. One of the significant features of recent export performance, has been fast growth of agro-based exports. In comparison, imports as a percentage of GDP which was 9.4 percent in 1990-91 has increased to about 10.4% in 1994-95.
1.15 The performance of the economy during the last three years and the current trends of 111:1101' indicators suggest that the macro-economic prospects for'grc'.'- ill during 1995-96 are good. Despite a somewhat delayed am-\ nl, inc South West monsoon picked up subsequently and normal to excess rainfall has been recorded in 29 out of 35 meteorological subdivisions. Even though there have been some subsequent floods, Ihe prodi;ction of major foodgrains and the production of coarse cereals, pulses and oilseeds may not decline from the levels reached in 1994-95.
1.16 On the industrial front the prospects appear to be encouraging. Recent data on indices of industrial production suggest that Indian industry is experiencing a strong and broad- based growth. The index of industrial production during 1994-95 has grown by over 8 percent. The manufacturing sector has done better by growing at 9 percent. Within the manufacturing sector, the capital goods sector has grown faster at about 25 percent. Even the consumer goods sector has shown a promising performance by growing at above 8 percent during 1994-95. Trends emanating from the industrial sector suggest that domestic industrial production growth rate is on the upswing. There are also signs that higher domestic industrial investment, which was responsible for pushing up industrial growth to over 8 percent during 1994- 95, would gather momentum during 1995-96 as Indian industry continues to modernise, upgrades technology and improves competitiveness.
1.17 The anticipated higher level of domestic industrial investment is likely to be supplemented by large foreign direct investments fructifying during 1995-96. Thus the indications are that industrial production as well as value added from industry may grow by about 8 to 10 percent in 1995-96. The service sector has grown at an annual average rate of about 5.8 percent during the last three years. There is every possibility that with an accelerated growth of industrial production, it could even grow by about 6 to 6.5 percent.
1.18 The emerging trends in the external sector suggest that the growth of exports would remain buoyant during 1995-96, and may stabilise at above 18 percent for the year. Although imports in dollar terms have been growing at about 30 percent, given the growth rate of imports observed during 1994-95 it would be reasonable to expect imports to grow by about 22 percent. Consequently the deficit in trade balance on DGCI and S account is likely to increase from a little over $ 2 billion in 1994-95 to about $4.5 billion in 1995-96. To this must be added about $ 1 billion on account ofnon-DGCl and S net imports during 1995-96. The invisibles account during 1995-96 is expected to show a net positive
balance of about $1.3 billion. As a result, the current account deficit may be of the order of $4.2 billion during 1995-96 as compared to about $2.3 billion during 1994-95. As a percentage ofGDP, the current account deficit is likely to be somewhat around 1.5 per cent in 1995-96 as compared to 0.8 percent in 1994-95. Given a comfortable foreign exchange reserves position, financing a moderate deficit of $4.2 billion should not be difficult, even if flows on the capital account slow down somewhat.
1.19 The Public Sector Plan outlay for the Centre, States and UTs was placed at Rs.4,34,100 crorc at 1991-92 prices for the Eighth Plan. Only 71.6 percent of this allocation has been utilised in the four Annual Plans (1992-96), Although there is an increasing trend, the actual realisation remains below the pro-rata. The shortfall arises mainly in the State Plans on account of the inability of States to mobilise their o\vr. resources. The Eighth Plan envisaged 41.5 per cent share of States in the Public Sector outlay. But in the four Annual Plans it-has remained below 37 per cent.
1.20 In the Eighth Plan, high priority has been accorded to programmes which enable the creation o (''human capital'. Plan outlay for social sectors was projected to increase from 16 % of the public sector plan outlay in the Seventh Plan to 18.2 percent in the Eighth Plan. However, in the Annual Plans 1992-96, the Plan allocations for social sectors have declined to below that level and is at present not substantially different from Seventh Plan share. The principal reason for this shortfall arises from the fact that the funding of social sectors is almost entirely through budgetary support (BS), with very little by way of Internal and Extra-Budgetary Resources (IEBR).Since the shortfall in BS has been much sharper than in IEBR, the cuts have fallen disproportionately on these sectors.
1.21 For analogous reasons there have also been substantial shortfalls in Plan outlays in Irrigation and Flood Control, Rural Development and Special Area Programmes. Since these outlays directly affect the well-being of the disadvantage^ sections of our population, it is imperative to not only provide higher outlays for these sectors in the terminal year of the Eighth Plan, but also to ensure better utilisation of (he resources. A sharper focus is required on implementation of the Minimum Needs Plan.
CHAPTER-11 PLAN PROGRESS
THE EIGHTH FIVE YEAR PLAN 1992-97
2.1 The Eighth Five Year Plan was launched in April, 1992 against the back-drop of momentous changes taking place in the world. These changes had profound impact on both the structure of international relations and the world economy. The wave of economic reforms that was sweeping the developing world had important implications for India in the nineties.
2.2 In the changed scenario ofglobalisation of the economy, while recognising the relevance of developmental planning, it was resolved that the Planning Commission would now work on building a long-term strategic vision of the future with concentration on anticipating future trends and evolving integrated strategies for the achievement of higher possible level of development of the country in keeping with competitive international standards. Accordingly, the Eighth Five Year Plan was formulated as an indicative plan which attempted for the first time to clearly define and de-limit the role of the Government and the Public Sector to the most essential activities important for society. The Plan document was considered by the National Development Council (NDC) in its fourty-fourth meeting held in May, 1992 and was endorsed.
2.3 An attempt has been made in the Plan to correct the fiscal imbalances from which the Sixth and Seventh Plans suffered. The non-inflationary manner to be adopted for funding of the Plan in order to avoid debt trap both internally and externally, called for a series of austerity measures which involved a reduction in Government's dissavings, higher resource mobilization both by the Centre and the States and improvement in the performance of public sector units.
2.4 The Eighth Plan recognised the essential need to involve people in the process of development. The Plan envisaged substantial devolution of power to the people's organisations at the district, block and village levels. Panchayats and Nagar Palikas would have a larger role in formulating and implementing the developmental projects in their areas.
2.5 The Eighth Plan paid special attention to employment in the rural areas with the objective of eradicating poverty.
2.6 The Plan proposed an average growth rate of 5.6 per cent per annum during the Plan period. The level of national investment was proposed at Rs. 7,98,000 crore and the public sector outlay at Rs. 4,34,100 crore. Consistent with the expected resources position, the size of the Plans of the Slates and Union Territories was projected at Rs. 1,86,235 crore and the Central Plan at Rs. 2,47,865 crore. This may be compared with the Seventh Plan outlay ofRs, 1,80,000 crore comprising Rs. 84,466 crore for the States and UTs and Rs. 95,534 crore for the Centre. The Plan outlays by broad heads of development for the Eighth Plan 1992-97 for Centre. States and Union Territories are given in Annexure 2.1.
FORMULATION OF ANNUAL PLANS
2.7 The Five Year Plan gets opcrationaliscd through the mechanism of Annual Plans. The formulation of the Annual Plan provide the Planning Commission with an opportunity to assess previous year's Plan performance in the various sectors and to suggest a re-orientation of policies and modifications of strategies consistent with the changing requirements so as to ensure achievement of the long tenn objectives.
2.8 In the third quarter of each financial year, the Planning Commission indicates to the State Governments and the Central Ministries the important objectives that should be kept in view while formulating the Annual Plan for the following year and to furnish their Plan proposals including physical targets and the corresponding financial outlays required, conform ing to the guidelines referred to above and within the overall framework of their respective Five Year Plans. The State Governments are advised to furnish their forecasts of finanical resources including proposals for mobilising additional resources for their Annual Plans, keeping in view the resources and outlay targets fixed for the Five Year Plan. The resource estimates of the State Governments thus furnished are discussed in depth in a series of meetings during November-December with senior officers of the State Governments. Similarly, indepth discussions are held with senior officials of the Central Ministries/Departments on their Annual Plan proposals, during October-December of each year.
2.9 The Plan outlays arrived at in the meetings between the Deputy Chairman and State Chief Ministers/Lt. Governors in respect of State Plans and at meetings taken by Member- Secretary, Planning Commission with the Secretaries of Central Ministries/Departments, regarding the Central Plan form the basis of budgetary provisions for the Plan for the ensuing year.
ANNUAL PLANS 1992-93,1993-94 AND 1994-95
2.10 For Annual Plan 1992-93, the first year of the Eighth Plan 1992-97, the actual expenditure for Centre, States and UTs amounts to Rs. 72852.44 crore which is less by Rs. 7919.52 crore (nearly 10%) than the approved outlay ofRs. 80771.96 crore. The shortfall in utilisation of outlays has been reflected bot'h in the Central and States/UTs sectors. After allowing for inflation (9.5% in WPI), the actual expenditure of the Central Plan outlay, works out to Rs. 39903 crore, which accounts for 16.1% of the Eighth Plan outlay amounting loRs. 2,47,865 crore at 1991-92 prices. The corresponding percentage share of utilisation of Eighth Plan provision, in 1992-93 for States/UTs sector is 14.3%.
2.11 The Annual Plan 1993-94 envisaged a total public sector outlay of Rs. 1,00,120.16 crore. The actual expenditure for Centre, States and UTs amounted to Rs. 88080.66 crore which was lower by 12.03% than the Budget Estimates for the Plan. The actual expenditure for Central Plan for 1993-94 amounting to Rs. 55215.88 crore against the budget estimates of Rs. 63936.16 crore represented an increase of 16.6% in real terms, whereas in the case of States and UTs, the increase in actual expenditure in 1993-94 was only of the order of 4% over 1992-93. The main reasons for the shortfall in States and UTs plan were deterioration in the balance of current revenues, erosion in the contribution of State Electricity Boards (SEBs) and State Road Transport Corporations (SRTCs), negative opening balances, mounting non-plan expenditure and shortfalls in the collection of small savings etc.
2.12 The Annual Plan 1994-95 envisaged a total public sector outlay ofRs. 1,12,197.12 crore in the budget estimates which on revision came down to Rs. 1,06,204.25 crore. Thus, the revised estimates were lower by 5.3% than the budget estimates for the Plan. The revised estimates of Central Plan outlay for 1994-95 amounted to Rs. 68315.64 crore against the budget estimates of Rs. 70140.96 crore. This represents an increase of 11.5% (in real terms allowing for inflation at 11% in WPI) over the actual expenditure of Rs. 55215.88 crore in 1993-94. While the revised Central Plan outlay was lower only marginally by 2.6%, the total outlay for States and UTs came down by 9.9% in the revised estimates. In the Central Sector, the shortfall was mainly due to inadequate mobilisation of Internal and Extra Budgetary Resources (IEBR) by the Public Sector undertakings and various Ministries /Departments even after providing more budgetary support in the revised estimates. The main reason for the shortfall in States Plan is on account of shortfall in resource mobilisation by the States.
ANNUAL PLAN 1995-96
2.13 The total public sector outlay for the Annual Plan 1995-96 has been fixed at Rs. 1,28,589.98 crore. This represents an increase of 14.6% over the approved outlay ofRs. 1,12,197.12 crore for the Annual Plan 1994-95. The Plan aims at strengthening and providing support to the important programmes/projects/schemes in the States' Sector as well as in the Central Sector keeping in view the national priorities envisaged in the Eighth Plan. The details of the Plan outlays for Centre, States and Union Territories are given in Annexure 2.2.
2.14 The Central Sector outlay of Rs. 78,848,84 crore constituting 61.3% of the total public sector outlay for 1995-96, has a step up of 12.4% in nominal terms over the approved outlay ofRs. 70,140.96 crore for the previous year. The Internal and Extra Budgetary Resosurces (IEBR) raised by the Central Public Sector Enterprises (CPSEs) and various Ministries /Departments contribute 63.23% amounting to Rs. 49854.62 crore of the total Plan outlay for 1995-96. The balance amount ofRs. 28994.22 crore is to be met from the Budget Support provided by the Government. The resource mobilisation through IEBR in financing the Central Annual Plan 1995-96 has registered an increase of 16.31% over the IEBR in the Annual Plan 1994-95. The Budgetary Support for the Annual Plan 1995-96 has been stepped up by 6.29% over that of the Annual Plan 1994-95.
2.15 The envisaged Plan outlay for States/UTs (including Special Area Programmes) is fixed at Rs. 49,741.14 crore for the Annual Plan 1995-96. This is higher by 18.3% over the budgeted outlay ofRs. 42056.16 crore for the Annual Plan 1994-95.
OVERALL PLAN PERFORMANCE (1992-96)
(i) OVERVIEW
2.16 The overall Public Sector Plan outlay during the Eighth Five Year Plan (1992-97) amounts to Rs. 4,34,100 crore at 1991-92 prices. The share of the Central Plan in this is Rs. 2,47,865 crore, or 57.1% .whereas the share of State Plans accounts for Rs. 1,79,985 crore, or 41.5%. The Plans of the Union Territories account for the remaining share ofRs. 6,250 crore, or 1.4% of the overall Eighth Plan Public Sector outlay. A review in real terms (i.e after allowing for inflation and assuming that the revised estimates for 1994-95 and budget estimates for 1995-96 would materialise), shows that the Plan performance in financial terms during the first four years of the Eighth Plan (1992-96) accounts for about 78% of the approved Eighth Plan outlay in the Central Sector. The corresponding proportion works out to about 62% and 87% for State Plans and UT Plans, respectively. In the Central Sector, 83% of the outlay envisaged for the Eighth Plan has been provided in the first four Annual Plans (1992-96). Allocations for infrastructure sectors, such as energy, transport and communications, range between 80 to 90 percent of the Plan outlay. In the case of Central Plan, the shortfall in Plan expenditure during the first four years of the Eighth Plan has been marginal vis-a-vis the •pro-rata rate of 80% of the approved Eighth Plan outlay, whereas there has been no shortfall in the case ofUT Plans. However, there have been major shortfalls in the Plan provision as well as expenditure of States for the first four Annual Plans vis-a-vis their Eighth Plan approved outlays. During the period 1992-96 about 67% of the total outlay envisaged in the Eighth Plan for States Sector has been provided. The shortfall is attributed mainly to the inability of most of the States to mobilise their own resources, adequately.
2.17 A statement showing the Eighth Plan outlays and progress of expenditure during the first four years of the Eighth Plan (1992-97) for Centre, States and UTs is given in Annexure 2.3. The details of overall expenditure by major Heads of Development during the first four years (1992-96) of the Eighth Plan vis-a-vis the expenditure for Seventh Plan and two subsequent seperate Annual Plans may be seen in Annexure 2.4.
(ii) INFRASTRUCTURE SECTOR
2.18 The shortfalls in overall Plan expenditure of States during the first four years of the Eighth Plan reflect shortfalls in crucial infrastructure sectors like power, roads and bridges, road transport etc. In the case of power, the expenditure during 1992-96 constitutes only about 58% of the approved Eighth Plan outlay of States thereby leading to a shortfall in expenditure by about 22 percentage points in pro-rata terms. Similarly, expenditure during 1992-96 in respect of roads and bridges constitutes about 73%, whereas the corresponding proportion in respect of the road transport is still lower at about 54% which means a shortfall by about 7% and 26 % in the case of roads and bridges and road transport, respectively, on pro-rata terms. In the case of Central Sector the overall shortfall vis-a-vis Plan outlay during 1992-96 has been marginal. Though energy sectorwhich includes power, petroleum, coal and lignite and non-conventional sources of energy as a whole account for 89% of the total Eighth Five Year Plan outlay for the four years, there has been noticeable shortfall in Plan expenditure in the case of the power sector, during 1992-96, which work out to 67% of the approved Eighth Plan outlay. The corresponding share in respect of ports is still lower at 53%. In pro-rata terms, this means a shortfall by 13 percentage points in the power sector and 27 percentage points in the case of Ports. Keeping in view the importance of infrastructure sector for overall economic growth as well as for attracting private investment to make good the deficiency in Public Sector investment caused by serious resource crunch, it is necessary to protect Plan outlays of crucial infrastructure sector in both Centre and State Plans.
(iii) SOCIAL SECTOR
2.19 There have been shortfalls in Plan expenditures in social sector (including Rural Development) in respect of both Central and State Plans. The overall social sector expenditure during 1992-96 accounts for about 68% of the approved Eighth Plan outlay in the case of States. The coresponding proportion in respect of Centre is 64%. In view of the social cost involved in structural adjustment process initiated'in July, 1991, it is necessary to ensure full protection of approved Plan outlays in social sector.
(iv) RESOURCE MOBILISATION
2.20 The details given above clearly bring out the fact that the shortfalls in Plan expenditure in the State sector have been bigger than in the Central sector. The main reason for shortfalls in States as mentioned earlier, has been their inability to raise resources for financing their Plans as per commitments made at the time of Annual Plan discussions. As a result, inspite of the increase in the share of States in total budgetary support to Public Sector Plan from 33.3% in the Seventh Plan to 41,5 % during the first four (1992-96) years of the Eighth Plan, the share of the States in the total Public Sector Plan outlay has come down from 40% in the Seventh Plan to about 36% during the first four years of the Eighth Plan.
2.21 It is, therefore, necessary to step up resource mobilisation efforts so as to protect the approved Plan outlays during the remaining period of the Eighth Plan, especially during the 1996-97 Annual Plan. In this regard, earnest efforts are required to improve the operational efficiency of State level Public Enterprises, especially of the State Electricity Boards (SEBs) and State Road Transport Corporations (SRTCs) so as to derive efficiency gains from these enterprises and thereby provide the much- needed resources for financing the State Plan outlays.
2.22 In the Central sector also, there is need to ensure flow of fimds to infrastructure sub-sectors like power, ports etc. Also, it is necessary to improve the performance of the CPSEs so as to minimise their dependence on budgetary support. A substantial amount of budgetary support, thus saved, could then be utilised by other priority sectors.
MINIMUM NEEDS PROGRAMME
2.23 The Minimum Needs Programme (MNP) specifically designed for the alleviation of poverty in the country with its main focus of attention on items of social consumption forms part of the developmental activities under social sectors. The areas covered under MNP include education, rural health and sanitation, public distribution system, improvement of urban slums etc. The State/UT-wisc break-up of approved outlays for various components for 1995-96 is given in Annexure 2.5.
ANNUAL PLAN 1996-97
2.24 The Plan discussions for formulation of Annual Plan 1996-97 of various Central Ministries/Departments have been completed by the end of January, 1996. However, it was subsequently decided to keep Net Budgetary Support more or less at 1995-96 (BE) level to enable presentation of an Interim Budget by the Union Government. An increase in Net Budgetary Support was provided in the case of some social sector/rural development schemes. The Interim Budget for 1996-97 presented in the Parliament in February, 1996 provided an outlay ofRs. 85004.04 crores for the Central Sector. The Central Plan Assistance to States/Union Territories has been fixed at Rs. 19506 crores in the Interim Budget. The Central Sector Plan Outlay comprises ofRs. 31015.01 crores as Budgetary Support and Rs. 53989.03 crores as Internal and Extra Budgetary Resources of Central Public Sector Enterprises (CP-SEs). Though the Planning Commission has completed the assessment of States' Own Resources, outlays in respect of States/Union Territories have not yet been finalised since the Plan discussions at Deputy Chairman-Chief Minister level are yet to take place.
ANNEXURE 2.1 PLAN OUTLAY BY BROAD HEADS OF DEVELOPMENT FOR EIGHTH PLAN 1992-97 (Rs. crores)
| SL. No. | HEADS OF DEVELOPMENT | CENTRE | STATES/UTs | TOTAL | |||
| Outlay | %age to total | Outlay | %age to total | Outlay | %age to total | ||
| 1. | Agriculture and Allied Service | bs ($) 12618.00 | 5.09 | 42374.50 | 22.75 | 54992.50 | 12.67 |
| 2. | Rural Development | 24170.00 | 9.75 | 10255.36 | 5.51 | 34425.36 | 7.93 |
| 3. | Energy | 66795.00 | 26.95 | 48766.09 | 26.19 | 115561.09 | 26.62 |
| 4. | Industry and Mineral* | 37539.00 | IS.14 | 9382.75 | 5.04 | 46921.75 | 10.81 |
| 5. | Transport | 40977.00 | 16.53 | 14948.57 | 8.03 | 55925.57 | 12.88 |
| 6. | Social Services | 34445.45 | 13.90 | 44566.45 | 23.93 | 79011.90 | 18.20 |
| 7. | Others (*) | 31320.55 | 12.64 | 9191.12 | 4.94 | 40511.67 | 9.33 |
| 8. | Area Programmes | 6750.16 | 3.62 | 6750.16 | 1.56 | ||
| GRAND TOTAL | 247865.00 | 100.00 | 186235.00 | 100.00 | 434100.00 | 100.00 | |
Include Agriculture
and Irrigation Sectors.
Include Communications, Science, Technology and Environment, General
Economic Services and General Services.
Annexure 2.2 PLAN OUTLAY BY BROAD HEADS OF DEVELOPMENT FOR ANNUAL PLAN 1995-96 (Rs.crore)
| Sl. No. | Heads of Developnmt | CENTRE | STATE/ UTs* | TOTAL | |||
| Outlay | %age to Total | Outlay | %age to Total | Outlay | %age to Total | ||
| 1. | Agriculture
and Allied Services (*) |
3309.49 | 4.20 | 10823.89 | 21.76 | 14133.38 | 10.99 |
| 2. | Rural Development | 6539.75 | 8.29 | 3383.00 | 6.80 | 9922.75 | 7.72 |
| 3. | lrrigation | 23794.64 | 30.18 | 11442.06 | 23.00 | 35236.70 | 27.40 |
| 4. | Indnitry i Hin«r»l» | 11598.23 | 14.71 | 2279.26 | 4.58 | 13877.49 | 10.79 |
| 5. | Transport | 14088.43 | 17.87 | 4008.43 | 8.06 | 18096.86 | 14.07 |
| C. | Social Services | 8839.11 | 11.21 | 13562.78 | 27.27 | 22401.89 | 17.42 |
| 7. | Others ($) | 10679.IS | 13.54 | 2461.54 | 4.95 | 13140.73 | 10.22 |
| 8. | Area Programmes | 0.00 | 0.00 | 1780.18 | 3.58 | 1780.18 | 1.39 |
| GRAND TOTAL | 78848.84 | 100.00 | 49741.14 | 100.00 | 128589.98 | 100.00 | |
* Include
Agriculture and Irrigation Sectors.
$ Include
Communication, Science, Technology and Environment, General Economic
Services and General Services.
Annexure 2.3 EIGHTH PLAN OUTLAY AND PROGRESS OF EXPENDITURE CENTRE,STATES and UTs. (Rs. crore)
| SL. | SECTOR | Eighth
Plan (1992-97) Outlay at 1991-92 prices |
Annual Plan at Current Prices |
||||
| 1992-93 Actual Exp. |
1993-94 Actual Exp. |
1994-95 |
1995-96 | ||||
| BE | RE | BE | |||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| 1. | Centre | 247865.00 | 43693.83 | 55215.88 | 70140.96 | 68315.64 | 78848.84 |
| 2. | States | 179985.00 | 27916.69 | 31500.61 | 39992.66 | 35825.11 | 47440.02 |
| 3. | Union Territories | 6250.00 | 1241.92 | 1364.17 | 2063.50 | 2063.50 | 2301.12 |
| TOTAL | 434100.00 | 72852.44 | 88080.66 | 112197.12 | 106204.25 | 128589.98 | |
Annexure - 2.4 PUBLIC SECTOR PLAN EXPENDITURE BT HEADS OF DEVELOPMENT CENTRE, STATES AND UNION TERRITORIES (Rs. crore)
| SL. NO. | Heads of Development | 7th Plan 1985-90 Exp. at current prices | Annual Plans 1990-92 at current prices | Eighth Plan 1992-97 at 1991-92 prices | 1992-96 Anti. Bxp. at 1991-92 prices | 1992-96 Xxp. as %age of 8th Plan for the sector |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| I. | Agriculture 6 Allied Activities | 12793 (5.85) |
7256 (5.89) |
22467 (5.18) |
16389 (5.27) |
72.95 |
| 2. | Irrigation, Conxnand Area Development 6 Flood Control | 16590 (7.58) | 8206 (6.66) | 32525 (7.49) | 18131 (5.83) | 55.74 |
| 3. | Area Programmes | 3470 (1.59) |
2053 (1.67) |
6750 (1.55) |
4674 (1.50) |
69.24 |
| 4. | Rural Development | 15247 (6.97) |
8292 (6.73) |
34425 (7.93) |
23761 (7.64) |
69.02 |
| 5. | Energy | 61811 (28.26) |
36835 (29.92) |
115561 (26.62) |
87767 (28.23) |
75.95 |
| 6. | Industry and Minerals | 29099 (13.30) |
12938 (10.51) |
46922 (10.81) |
31796 (10.23) |
67.76 |
| 7. | Transport | 29549 (13.51) |
17388 (14.12) |
55926 (12.88) |
43976 (14.15) |
78. 63 |
| 8. | Communications | 8425 (3.85) |
6562 (5.33) |
25110 (5.78) |
21414 (6.89) |
85.28 |
| 9. | Science, Technology and Environment | 3024 (1.38) |
1621 (1.32) |
9042 (2.08) |
4155 (1.34) |
45.95 |
| 10. | General Kconooic Services | 2249 (1.03) |
1598 (1.30) |
4550 (1.05) |
5013 (1.61) |
110.18 |
| 11. | Social Services | 34960 (15.98) |
19906 (16.17) |
79012 (18.20) |
51588 (16.59) |
65.29 |
| 12. | General Services | 1514 (0.69) |
467 (0.38) |
1810 (0.42) |
2233 (0.72) |
123.37 |
| GRAND TOTAL | 218731 (100.00) |
123122 (100.00) |
434100 (100.00) |
310897 (100.00) |
71.62 |
NOTE: Figures in brackets indicate the percentage share of each sector to the total.
Annexure - 2.5 Apprwed Outlay for Minitiun Needs Progranne for 1995-96 (Prwisional) (Rs. lakh)
| Sl. No | State / UTs. | Education | Rural Health | Rural Water Simply | Rural Sanitation | Rural Electrification | Rural Roads | |
| Elementary | Adult | |||||||
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| 1 | Andhra Pradesh | 6230.32 | 1100.00 | 1029.00 | 5600.00 | 300.00 | - | 500.00 |
| 2 | Annachal Pradesh | 3300.00 | 105.00 | 448.00 | 1140.00 | 68.00 | 400.00 | 1610.00 |
| 3 | Assail | 16600.00 | - | 20.8.00 | 5504.00 | 148.00 | 2200.00 | 358.00 |
| 4 | Bihar | 9500.00 | 999.00 | 2700.00 | 7216.00 | 600.00 | 790.00 | 7326.00 |
| 5 | Goa | 445.00 | 38.00 | 170.00 | 375.00 | 100.00 | - | |
| 6 | Gujarat | 1450.61 | 395.49 | 2160.00 XX | 6566.00 | 400.00 | 1000.00 | |
| 7 | Haryana | 3834.00 | 100.00 | 1063.00 | 2490.00 | 235.00 | 10.00 | |
| 8 | Himachal Pradesh | 3644.15 | 50.00 | 1400.00 | 1925.00 | 1050.00 | 1500.00 | |
| 9 | Jaimu and Kashni r | 4205.00 | 92.00 | 1946.00 | 3701.00 | 523.00 | 890.00 | |
| 10 | Kamataka | 17614.91 | 718.63 | 3638.00 | 11425.00 | 1131.00 | 1502.00 | |
| 11 | Kerala | 605.00 | 675.00 XX | 5195.00 | 200.00 | - | ||
| 12 | Machya Pradesh | 10028.00 | 583.00 | 2919.00 | 5656.00 | 370.00 | 2700.00 | 2300.00 |
| 13 | Maharashtra | 9918.00 | 631.00 | 6698.97 XX | 20221.00 | 200.00 | 3790.00 | |
| 14 | Manipur | 595.17 | 61.00 | 231.00 | 977.00 | 90.00 | 800.00 | 950.00 |
| 15 | Meghalaya | 1950.00 | 100.00 | 946.00 | 1000.00 | 70.00 | 250.00 | 860.00 |
| 16 | Mizoram | 500.00 | - | 400.00 | 300.00 | 10.00 | 700.00 | - |
| 17 | Nagaland | 558.00 | 7.00 | 175.00 | 450.00 | - | - | 550.00 |
| 18 | Orissa | 2698.00 | 434.00 | 1293.00 | 3376.00 | 150.00 | 800.00 | 2372.00 |
| 19 | Punjab | 1471.00 | 143.00 | 1100.00 | 4549.00 | 100.00 | ||
| 20 | Rajasthan | 15692.00 | 450.00 | sae.oo | 10180.00 | (240.00)3 | 2700.00 | 8880.00 |
| 21 | Sikkim | 785.00 | 15.00 | 170.00 | 402.00 | 25.00 | 669.00 | |
| 22 | Tamil Nadu | 5413.00 | 1943.00 | 3014.00 | 6570.00 | 389.00 | 2550.00 | |
| 23 | Tripura | 2400.00 | 460.00 | 1228.00 | 40.00 | 385.00 | 950.00 | |
| 24 | Uttar Pradesh | 6%5.00 | 1104.00 | 5361.00 | 9533.00 | 2576.00 | 4500.00 | 16800.00 |
| 25 | West Bengal | 3T30.00 | 526.00 | 995.00 | 4190.00 | 214.00 | 1265.00 | 1400.00 |
| 26 | A and N Island | 1028.36 | 8.90 | 330.00 | 410.00 | 550.00 | - | - |
| 27 | Chandigarh | 347.25 | 119.56 | - | (36.00)o) | 45.00 | ||
| 28 | D and N Haveli | 249.83 | 5.00 | 45.00 | 87.00 | - | - | 170.00 |
| 29 | Daman S Diu | 178.78 | 3.85 | 50.00 | 70.00 | - | - | 34.00 |
| 30 | Delhi | 8214.00 | 50.00 | 0.00 | 500.00 | (40.00)3 | - | - |
| 31 | Lakshadeep | 76.85 | 3.00 | 39.35 | 90.00 | 14.00 | - | 82.00 |
| 32 | Pondi cherry | 511.50 | 0.50 | 214.00 | 104.00 | 10.00 | - | 0.00 |
| Total State/Ut's | 139979.73 | 9666.37 | 50133.88 | 131080.00 | 9563.00 | 17490.00 | 57108.00 | |
| -10050.00 | +(316.00) | |||||||
| 121030.00 | 9879.00 | |||||||
| Total Central Allocation | 65104.00 | 23400.00 | 0.00 | 111000.00 | 6000.00 | 0.00 | 0.00 | |
| Grand Total | 2050S3.73 | 3306 and .37 | 50133.88 | 242080.00 | 15563.00 | 17490.00 | 57108.00 | |
| -10050.00 | +(316.00) | |||||||
| 232030.00 | 15879.00 | |||||||
XX Working Group
Figures.
@ Represents
outlay for Rural Sanitation including irder R.D. Sector.
# Excludes Rs.100.50 crore provided for R W S outside WP urfer project
erf laying Pipeline for Saurashtra and Kutch region.
Annexure2.5 (Contd.) Approved Outlay for Mininun Needs Progranre for 1995-96 (Provisional) (Rs. Lakh)
Sl.No |
State / UTs. | Rural Housing | Environmental Improvement of Urban Slums |
Nutrition | Rural Dcmastic Cooking Energy |
P.D.S. Total |
||
| Inproved Chulha | Area Fuel |
Oriented
wood Project |
||||||
| 1 | 2 | 10 | 11 | 12 | 13 | 14 | 15 | 16 |
| 1 | Andhra Pradesh | 10288.00 | 191.50 | 3153.00 | 50.00 | 0.00 | 28441.82 | |
| 2 | Arunachal Pradesh | 138.00 | - | 270.00 | - | 30.00 | 1W.OO | 7618.00 |
| 3 | Assail | 365.00 | 60.00 | 1645.00 | - | 130.00 | 135.00 | 29193.00 |
| 4 | Biter | 260.00 | 300.00 | 2200.00 | - | 100.00 | 324.00 | 32115.00 |
| 5 | Goe | 20.00 | - | 56.00 | - | 8.00 | 5.00 | 1217.00 |
| 6 | Gujarat | 1764.00 | 600.00 | 11935.00 | - | 120.00 | 80.00 | 26471.10 # |
| 7 | Haryana | 1082.00 | 500.00 | 1106.00 | - | 250.00 | 0.00 | 10670.00 |
| 8 | Himachal Pradesh | 500.00 | 81.00 | 300.00 | - | 150.00 | 849.00 | 11449.15 |
| 9 | Jamiu and Kashmir | 58.00 | 100.00 | 600.00 | - | 50.00 | 132.00* | 12297.00 |
| 10 | Kamataka | 8446.00 | 859.00 | 3626.67 | - | 200.00 | 0.00 | 49161.21 |
| 11 | Kerala | 200.00 | 160.00 | 440.00 | - | 100.00 | 55.00 | 7630.00 |
| 12 | Madhya Pradesh | 1500.00 | 596.00 | 2200.00 | - | 300.00 | 340.001 | 29494.00 |
| 13 | Maharashtra | 724.00 | 4162.00 | 1155.00 | - | 65.00 | 0.00 | 47564.97 |
| 14 | Manipur | - | - | 200.00 | - | 120.00 | 58.00 | 4083.17 |
| 15 | Meghalaya | 75.00 | 40.00 | 238.00 | - | 100.00 | 40.00 | 5669.00 |
| 16 | Mizoran | 10.00 | 10.00 | 135.00 | - | 300.00 | 60.00 | 2425.00 |
| 17 | Nagatard | - | - | 154.00 | - | 40.00 | 79.00 | 2013.00 |
| 18 | Orissa | 300.00 | 80.00 | 4900.00 | - | 272.00 | 74.00 | 16749.00 |
| 19 | Punjab | 100.00 | - | 200.00 | - | 175.00 | 5.00 | 7843.00 |
| 20 | Rajasthan | 650.00 | 445.00 | 1521.00 | 200.00 | 278.00 | 49292.00 +(240) | |
| 21 | Sikkim | 30.00 | - | 207.00 | - | 70.00 | 52.00 | 2425.00 |
| 22 | Tamil NadLl | 2010.00 | 526.00 | 11603.00 | - | 100.00 | 210.00 | 34328.00 |
| 23 | Tripura | - | 50.00 | 715.00 | - | 50.00 | 17.00 | 6305.00 |
| 24 | Uttar Pradesh | 1919.00 | 794.00 | 3040.00 | - | 280.00 | 10.00 | 52862.00 |
| 25 | Uest Bengal | 27.00 | 270.00 | 954.00 | - | 140.00 | 100.00 | 13271.00 |
| 26 | A S N Island | - | - | 34.74 | 92.40 | 2454.40 | ||
| 27 | Chandigarh | 1.00 | - | S.OO | 48.76 | 566.57 +(36) | ||
| 28 | D and N Haveli | - | - | 46.97 | 15.30 | 619.10 | ||
| 29 | ' Daman S, Diu | 4.55 | 1.50 | 0.00 | 3.95 | 346.63 | ||
| 30 | Delhi | %0.00 | 1926.00 | 210.00 | 11860.00 +(40) | |||
| 31 | Lakshadeep | - | 17.00 | 33.20 | 355.40 | |||
| 32 | ' Pordicherry | 92.00 | 45.00 | 310.00 | 81.00 | 1368.00 | ||
| Total State/Ut's | 30563.55 | 10833.00 | 548,3.38 | 0.00 | 3400.00 | 3495.61 | 518207.52 | |
| -10050.00 | ||||||||
| 508157.52 +(316) | ||||||||
| 508473.52 | ||||||||
| Total Central | 0.00 | 0.00 | 0.00 | 1500.00 | 3400.00 | 1435.00 | 211839.00 | |
| Allocation | ||||||||
| Grand Total | 30563.55 | 10833.00 | 54893.38 | 1500.00 | 6800.00 | 4931.61 | 720312.52 | |
$ Schemes of PCS shokn under Food.Storage and warehousing and outlay included in total.
PLAN OUTLAY BY BROAD HEADS OF DEVELOPMENT (IN RS. CRORES) EIGHTH PLAN 1992-97 Rs. 434100 Crores
 |
 |
$
AGRI and SERVICES INCLUDES AGRICULTURAL and ALLIED SERVICES and
IRRIGATION AND FLOOD CONTROL
*
OTHERS INCLUDE COMMUNICATIONS, SCIENCE, TECHNOLOGY and ENVIRONMENT,
GENERAL ECONOMIC SERVICES and GENERAL SERVICES
PLAN OUTLAY BY BROAD HEADS OF DEVELOPMENT ANNUAL PLAN
$ AGRI and SERVICES
INCLUDES. AGRICULTURAL and ALLIED SERVICES and IRRIGATION AND FLOOD
CONTROL
* OTHERS
INCLUDE COMMUNICATIONS, SCIENCE, TECHNOLOGY and ENVIRONMENT, GENERAL
ECONOMIC
SERVICES and GENERAL SERVICES
PLAN OUTLAY BY BROAD HEADS OF DEVELOPMENT Eighth Plan 1992-97 (in Rs. Crores)
$ AGRI and SERVICES
INCLUDES AGRICULTURAL AND ALLIED SERVICES AND IRRIGATION AND FLOOD CONTROL
" OTHERS INCLUDE COMMUNICATIONS, SCIENCE, TECHNOLOGY AND ENVIRONMENT,
GENERAL ECONOMIC SERVICES and GENERAL SERVICES
PLAN OUTLAY BY BROAD HEADS OF DEVELOPMENT
$ AGRI and SERVICES
INCLUDES AGRICULTURAL AND ALLIED SERVICES AND IRRIGATION AND FLOOD CONTROL
* OTHERS INCLUDE COMMUNICATIONS, SCIENCE, TECririCLGGY AND ENVIRONMENT,
GENERAL ECONOMIC SERVICES and GENERAL SERVICES
