PlanComm advises states to maintain fiscal discipline

There has been no discussion so far on cutting Plan expenditure, the Planning Commission said on Thursday even as it asked states to maintain fiscal discipline.

"During the meetings with the states' representatives, they were asked to maintain fiscal discipline," Planning Minister Rajeev Shukla told PTI.

On whether the government is contemplating any cut in the Plan expenditure to meet fiscal deficit target, he said: "There has been no discussion with the Finance Ministry on this issue so far."

During the last fiscal, the government had cut around Rs 92,000 crore of Plan expenditure to keep the fiscal deficit at 4.9 per cent of Gross Domestic Product (GDP).

The government has set a fiscal deficit target of 4.8 per cent of GDP for the current fiscal. Earlier last month, the Finance Ministry had announced cutting non-plan expenditure by 10 per cent and outlined certain austerity measures to reduce burden on exchequer.

According to a Finance Ministry circular, states cannot spend more than 33 per cent of the allocated Plan expenditure in the last quarter (January-March) of this fiscal and it should not be more than 15 per cent of the total in last month (March) next year.

During the discussions with various state government representatives, the Commission has also advised the states to hold back their proposals for additional fund till November.

"We have asked the states to hold back their demand for additional Plan spending till November end in view of prevailing economic situation. We may take a call on these demand only after November after assessing the economic scenario," the minister said.

According to experts, there seems to be slow recovery in economic situation till now going by the dismal economic growth of 4.4 per cent in the first quarter (April-June) this fiscal.

The next quarterly Gross Domestic Product or economy data for the second quarter (July-September) would be released by Ministry of Statistics and Programme Implementation on November 29.

Experts say they would be able to comment about the rebound of the economy only after the second quarter data is available. The country had recorded a decade low economic growth of 5 per cent in the previous fiscal.