The UPA government is unlikely to draw any comfort on the fiscal front owing to the grim resource mobilization scenario. So much so that it has conceded that there will be “substantial shortfalls” in the Gross Budgetary Support (GBS) in the next two fiscals. In a note circulated for the Economic Editors’ Conference, the government said resources made available through GBS for 2008-09 and 2009-10 (BE) were larger in real terms than was originally envisaged in the 11 th Plan. “We are likely to face substantial shortfalls in the next two years compared to the GBS originally predicted. This outcome is a significant departure from the 11th Plan premise that there would a sharp increase in GBS availability in the last two years of the Plan,” the Planning Commission observed in the note.

This situation arose because the process of fiscal contraction, which was expected to come to an end in 2008-09 and pave the way for the release of additional resources, has not happened, the plan panel said. It pointed out that though the government has been able to exceed Plan projections in the first three years because of the fiscal stimuli, “this has raised the fiscal deficit to an unsustainable level, which has to be reduced.”