Prime Minister Atal Bihari Vajpayee is likely to intervene to resolve the standoff between the finance ministry and the Planning Commission over the gross budgetary support of Rs 1,34,000 crore (Rs 1,340 billion) for 2003-04.
According to top government officials, the prime minister is being roped in to convince Finance Minister Jaswant Singh about the need for a step up in the gross budgetary support for the next fiscal.
In a recent letter to Planning Commission Deputy Chairman KC Pant, the finance minister pointed to the difficult fiscal situation and the paucity of resources in the wake of the drought.
Singh has conveyed to the panel that it would be difficult to provide such a huge support next year.
North Block officials said the gross budgetary support at Rs 1,13,500 crore (Rs 1,135 billion) for 2002-03 already represented a significant 14.5 per cent jump over the previous year's outlay.
In an earlier letter to Pant in October 2002, Singh had said that the entire Plan expenditure was met through borrowed funds.
"While borrowing itself is undesirable, it must be used for productive expenditure and not for current expenditure," he had told Pant.
The gross budgetary support is a major expenditure item for the Centre and accounts for over one-fourth of the total government spend in the current fiscal.
Singh had even in the mid-year review of the economy said that a Plan expenditure that does not increase the government's revenues in subsequent years creates problems for servicing the debt incurred in financing the Plan itself.
Further, a large Plan size, when combined with indifferent implementation, leads to a deterioration of fiscal balances both at the state and Central levels.
The mid-year review stated that major possibilities for augmenting Plan resources existed through public-private partnerships in both physical and social infrastructure.
Such partnerships should be vigorously pursued and in fact, should be the default option in due course, it said.