To allocate resources for 12th five year plan starting next year, planning commission has recommended a cut in the non plan expenditure, a generic term for the expenditure not included in the five year plan, for the current fiscal year.
The planning commission has recommended reducing the non plan expenditure to 7.2 per cent from the current 10.3 per cent. Most of the non- plan outlay is in the form of subsidy, interest payment and defense expenditure.
Finance ministry has also agreed in principle to reduce these non plan expenditures for the better management of the fiscal deficit for next year.
Average annual growth rate is estimated at 9-9.5 per cent for the next fiscal year and the Govt. budgetary support to the five year plan is expected to rise by a meager 1.3 percent.
This marginal rise in gross budgetary support is in accordance with the fiscal consolidation map laid down to reduce the fiscal deficit to 3% of GDP by 2013 from the current 5.1%.
The centre needs to allocate 7.4% of the GDP to fund the 12th five year plan against 6.4% allocated for the current plan.
Planning commission in consultation with finance ministry has projected an average annual increase in subsidy, pension payouts and defense expenditure to be 5%, 12% and 10% respectively compared to that of 24%, 23% and 14% for the 11th plan.