The Union budget 2007-08 will very likely slash development funds for the most backward regions of India by more than 48 per cent, say sources at the Union ministry of Panchayati Raj. Government is expected to further slash budgetary support to development schemes to adhere to the Fiscal Responsibility and Budget Management (FRBM) Act, 2003.
The act requires the government to bring down its fiscal deficit to 3 per cent of the country's GDP and to make revenue deficit nil by 2008 (see 'Passing bucks', Down To Earth, February 15, 2007). To observe this fiscal prudence, allocation for the Backward Region Grant Fund (BRGF) will be slashed from Rs 3,750 crore to Rs 1,925 crore.
The Cabinet Committee on Economic Affairs approved BRGF in August 2006, to reduce extreme poverty and bridge regional disparity.Of the Rs 3,750 crore, Rs 250 crore was for capacity building, Rs 2,500 crore for Panchayati Raj institutions, while the remaining Rs 1,000 crore was to be distributed on basis of population and area. The programme was to begin in October 2006 across the country's 250 backward districts. But it got delayed because the district planning committees could not be finalised.
Now that there is a massive slash in the allocations for BRGF, the Panchayati Raj ministry would have to rework its allotments and the programme may suffer from meeting its stated objectives.
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