Sunday, February 13 2005 09:30 Hrs (IST) - World Time -

New Delhi: BJP (Bharatiya Janata Party) today (Feb 13, 2005) said the 2005-06 Budget would be driven by political considerations rather than economic rationale to appease Left parties, which have major stake in Assembly elections in West Bengal and Kerala next year.

"He (Finance Minister P Chidambaram) may not be able to do much. With FRBM Act, his hands are tied. He has to choose whether Budget keeps economic interest in mind or the political interests. I think it will be a political budget," BJP's economic think-tank member Jagdish Shettigar told sources in New Delhi.

Although UPA (United Progessive Alliance) has made a committment in Common Minimum Programme (CMP) to wipe off revenue deficit by 2008-09, he said, "The current situation does not look like they will be able to adhere to that (FRBM)."

"I have my doubts especially after the demands placed by Left parties on allocating Rs 50,000 crore for social sectors. The UPA chairperson has also pegged an additional Rs 30,000 crore for the same purpose in the Budget," Shettigar, a former member of PM's Economic Advisory Council, said.

He listed out various fiscal constraints that Chidambaram faces, including a projected shortfall in revenue collection by Rs 15,000 crore and debt servicing of Rs 35,000 crore.

This apart, Centre has to find additional resources of Rs 26,000 crore to meet the hike in allocation for States in 2005-06 following 12th Finance Commission recommendation.

"They have to cut down expenditures. The Finance Minister may have to transfer more development funds to the social sectors," he said.

While welcoming the National Employment Guarantee Scheme, Shettigar said "it will require an additional Rs 40,000 crore annually. It is not practicable."