lannin in ndia      5.41
     essence and the end result of the ‘fiscal policies’ of        through the Plan Finance-II Division
     both the Centre and the states.                               of the Ministry of Finance.
          For Indian economy to move on the path of         2. State Governments: Other than the
     desired growth and development, the Government            fund requirements of the GoI, the states
     of India (GoI) needs to take care of the issue of         also need funds for their developmental
     resource mobilisation for various agents in the           requirements (similar to the GoI)—they
     economy, namely –                                         get the funds mobilised through three
          1. GoI,                                              sources: firstly, through their own sources
                                                               of income and market borrowings (after
          2. State governments,
                                                               the recommendations of the 13th Finance
          3. Private sector, and                               Commission states are allowed to finance
          4. General public                                    25 per cent of their Plan Expenditure
          In India, the responsibility of mobilising           through market borrowing for which
     resources for the planned development of the              they do not need any permission from
     country was given to the Planning Commission              the GoI, provided they have effected
     (PC). The commission used to take care of the             their Fiscal Responsibility Acts); secondly,
     fund requirements of the centre and the state             through the loans they get from the GoI
     governments. Practically, it was the PC which has         on the advice of the PC (Ministry of
     to put in place the means by which the required           Finance, GoI, shows these expenditures
     funds for the planned targets of the economy were         in the Plan Finance-I Division); and
     mobilised. These plan targets are set by the GoI          thirdly, through the GoI Central Sector
     through the PC itself. The plan targets set by            Schemes, Centrally Sponsored Schemes
     the states are also duly taken care of the PC in          and Additional Central Allocations (this
     due course of this process. Though the effective          includes the fund transfer to the states
     responsibilities to mobilise resources ultimately         under ‘Special Category States’).
     rests with the Ministry of Finance in which the        3. Private Sector: Other than the
     various departments and divisions of the ministry         government, a large amount of fund is
     play their diverse and highly focused roles.              required by the private sector to meet
                                                               their short-term (working capital) and
          1. GoI: To the extent GoI is concerned it
                                                               long-term (capital market) requirements.
              needs funds to realise two categories of
                                                               The GoI needs to take care of this issue
              the planned targets, namely:
                                                               also—the financial system is managed in
               (i) Infrastructural targets (which chiefly      such a way that other than the government
                   include power, transportation and           the private sector is also able to mobilise
                   communication; in coming years so           resources for its various requirements.
                   many other sectors got attached with        This becomes even more important in a
                   it, for example, technology parks,          mixed economy, which is reforming and
                   urban infrastructure, etc.); and            favours increased participation in the
              (ii) Social sector targets (which includes       economy from the private sector.
                   education, health, social security,             This needs focused reform in the
                   etc.—known as the Human                     financial system as it was structured to
                   Development related targets since           channelise more funds and resources
                   2010–11). These funds get mobilised         towards government needs before the