constituted - of Planning Commission

As per the MTFPS (2011-12), Defence Services expenditure on revenueaccount is estimated to marginally increase to `95,217 crore in BE 2011-12reflecting a growth of 4.9 per cent over RE 2010-11. As a proportion of GDP,this component is estimated to come down from 1.4 per cent in 2009-10 to 1.1per cent in B.E. 2011-12.As defence revenue expenditure includes pay and allowances for DefenceForces Personnel, the Group went into the breakup of defence revenueexpenditure classifying it as expenditure on pay and allowances and that onother non-plan revenue expenditure. Taking into account the fact that pay andallowances of Defence Force Personnel include a much larger number ofallowances as compared to civilians as also the fact that a Military Service payhas separately been granted to Defence Services Personnel, the Group assumeda growth rate of 8 per cent per annum on the expenditure on pay and allowancesof Defence Service Personnel. For the remaining portion of Defence RevenueExpenditure, a growth rate of 6.5 per cent per annum has been assumed. TheGroup also noted that the projections made by the Working Group forassessment of financial resources during the Eleventh Plan period were basedon an average annual growth rate of 7.2 per cent.Subsidies: Total expenditure on subsidies increased by 102.42 per cent from`70,926 crore in 2007-08 to `1,43,570 in 2011-12. The Thirteenth FinanceCommission was of the view that without subsidy reform it would not bepossible to improve the supply of national public goods and also maintain fiscalprudence. They felt that the time was opportune to implement reforms in theadministration of key subsidies pursuant to the recommendations of the varioushigh-powered committees and other institutions that have provided valuablesuggestions in this regard. They also consulted the line ministries concerned onthe subject to ensure that such reforms can be implemented without adverselyaffecting the consumption capabilities of the target groups.Working Group Report on Centre’s Financial ResourcesPage-35