The finance ministry has decided to target a 6 per cent growth rate in gross domestic product for the next financial year against the ambitious 8 per cent growth rate projected by the Planning Commission.
Finance Minister Jaswant Singh is scheduled to meet Prime Minister Atal Bihari Vajpayee on Thursday to apprise him of the broad contours of the Budget.
The macro projections for 2003-04 include a 6-6.5 per cent gross domestic product growth rate and a 4 per cent year-on-year inflation target.
The Central Statistical Organisation is expected to release the advance estimates of the growth rate of the economy for 2002-03 on Friday.
For 2002-03, it is expected to be about 5.5 per cent. The CSO also advises the Centre on the band within which the economy would grow in the next financial year.
According to finance ministry officials, the allocations for the different ministries were being based on an estimated GDP growth rate of 6-6.5 per cent.
The ministry's mid-year review of the economy announced in December 2002 has also warned about the risk of under-performance in the current fiscal and has added that accelerating the growth rate would depend on fiscal consolidation, accelerating structural reforms and improvement in infrastructure.
The differing views of the finance ministry and the Planning Commission on the projections of annual GDP growth rate have also considerably delayed the finalisation of the gross budgetary support for the plan schemes of various ministries and the state plans.
While the Planning Commission has asked for a GBS of Rs 1,34,000 crore (Rs 1,340 billion) for 2002-03 based on an 8 per cent GDP growth, the finance ministry has said that resource crunch would not allow it to grant a GBS of more than Rs 1,00,000 crore (Rs 1,000 billion).
The prime minister is expected to resolve the stand-off soon.
Run-up to the Budget 2003