The Planning Commission has shot off a letter to the finance ministry warning that inability to provide a gross budgetary support of Rs 1,34,000 crore (Rs 1,340 billion) for 2003-04 would hamper growth prospects.

With barely four weeks to go for the Budget, there has not been a single meeting between Planning Commission Deputy Chairman K C Pant and Finance Minister Jaswant Singh.

While there has been only an exchange of letters between the two, they have separately met the prime minister and apprised him of the developments.

According to government sources, in the last meeting between Planning Commission and finance ministry officials earlier this month, Finance Secretary S Narayan had said the ministry could provide a gross budgetary support of only Rs 1,00,000 crore (Rs 1,000 billion).

The Plan panel's demand for a Rs 1,34,000 crore gross budgetary support represents a 18.5 per cent increase over Rs 1,13,500 crore (Rs 1,135 billion) provided for 2002-03.

In a letter to the Plan panel this week, Expenditure Secretary D C Gupta has said the finance ministry will support the Plan to the tune of Rs 1,02,000 crore (Rs 1,020 billion).

Planning Commission Secretary N K Sinha has now said a lower gross budgetary support will pull down growth prospects for the next financial year.

The prolonged tiff between the Plan panel and North Block has, however, left officials involved in the Budget-making exercise jittery.

"We hardly have a fortnight's time to finalise the allocation for various central ministries," said a Planning Commission official.

Given the slow pace of industrial recovery, increased public investment for at least one more year was a must, Planning Commission officials said.

An expansionary fiscal stance next year would give the private sector a year's time before they started to spend, they said, adding that an increased fiscal deficit was fine if it led to growth.

The finance ministry is, however, extremely wary of letting the fisc slip.

With repeated warnings by international credit rating agencies, reining in the fiscal deficit has been the top priority for North Block.