After the intervention of Prime Minister Atal Bihari Vajpayee, the finance ministry has decided to step up Plan allocation in the forthcoming Budget to Rs 1,21,000 crore (Rs 1.2 trillion) -- Rs 3,500 crore (Rs 35 billion) more than its original proposal.
Official sources said that the finance ministry wanted to retain the Gross Budgetary Support at around last year's level but subsequently decided to hike it marginally on the prime minister's request.
Vajpayee's intervention followed a letter from Planning Commission Deputy Chairman K C Pant informing him about the adverse impact that a cut in Gross Budgetary Support would have on social sectors like education, drinking water and employment.
The finance ministry wanted to peg GBS at Rs 1,17,500 crore (Rs 1.17 trillion), which was more or less the same as last year's level of Rs 1,13,500 crore (Rs 1.13 trillion), taking into account the inflation of about four per cent.
The ministry's argument was that the GBS was not being utilised fully year after year and hence did not merit a hike.
But the Planning Commission felt that any cut at this juncture would hit social and public investment at a time when the economy was in the process of recovery.
Projects that would have been hit include the National Highways Development Project, the Railways, the village electrification programme and the family welfare programme.