3-year fiscal framework may replace Five-Year Plan: Panagariya
Finance Minister Arun Jaitley has already announced in his Budget speech about doing away with the classification of Plan and Non-Plan expenditure in the backdrop of 2016-17 being terminal year of the 12th Plan period (2012-17)
Government may replace the Five-Year Plan system with a medium-term fiscal framework that will project revenue and expenditure allocations for the next three years beginning 2017-18.
Finance Minister Arun Jaitley has already announced in his Budget speech about doing away with the classification of Plan and Non-Plan expenditure in the backdrop of 2016-17 being terminal year of the 12th Plan period (2012-17).
"Last two years of the 12th Five Year Plan (2012-17) will be used as transition. One direction seems to be clear that perhaps we will not be doing Five-Year Plans," NITI Aayog Vice Chairman Arvind Panagariya said during an online talk.
He further said, "One possibility is to introduce medium term fiscal framework planning which may entail some sense of prediction what the next two or three years, and what the revenues are likely to be. How the resulting expenditure will be allocated across different ministries. Next year, it (government) may roll out for the next three years." Elaborating further he said, "If the funds are allocated to a ministry then there should be some sense of responsibility to deliver. At the end of the year there will be an assessment." Under the current Five-Year Plan system, the review of implementation is done mid-way through the plan and sometimes targets are revised.
About the role of Niti Aayog, he said, "If this is the road being taken then Aayog will be an agency to mediate this.
The Finance Ministry will deal with finances and other ministry will deal with the action, but besides both of these somebody must do planning of expenditure. Most importantly ex-post assessment of delivery. It will provide policy support and monitor." On posting 8 per cent economic growth, he said, "The advance estimates of GDP growth for the fourth quarter of this fiscal is 7.8 percent. We are very close. We are almost there." On slow recovery he said, "This gloom is based on stress on certain sectors of economy. Stress was inherited from certain sectors of economy - steel, construction. These are industries which contributed to the NPAs. But the largest part of economy is growing and healthy like auto, auto parts and service.