Gross Budgetary Support (GBS)

Gross Budgetary Support (GBS) refers to the total financial assistance provided by the Government of India from the Union Budget to fund the Plan or Developmental Expenditure of various ministries, departments, and public sector enterprises (PSEs). It represents the budgetary component of government spending used to support the implementation of development schemes, projects, and infrastructure programmes that form part of the government’s planned economic growth strategy.
The concept of GBS originated during India’s Five-Year Plan era, when the government distinguished between Plan and Non-Plan expenditure. Although the Plan/Non-Plan distinction was discontinued from 2017–18, the term Gross Budgetary Support continues to be used, particularly in the context of Central Sector Schemes, Centrally Sponsored Schemes, and Public Sector Undertakings (PSUs).

Background and Evolution

During the planning period that began with the First Five-Year Plan (1951–56), the central government financed development programmes through two main sources:

1. Budgetary Support: Allocations made directly from the Union Budget.
2. Internal and Extra-Budgetary Resources (IEBR): Funds raised by PSUs or departments through market borrowings, bonds, or internal accruals.

Together, these two formed the total Plan Outlay. The portion financed through the Union Budget came to be known as Gross Budgetary Support (GBS).
After the abolition of the Planning Commission in 2014 and the establishment of NITI Aayog, the concept of GBS continued in a modified form to denote the budgeted capital and revenue expenditure devoted to development purposes, including infrastructure, social welfare, and economic growth programmes.

Definition

In simple terms, Gross Budgetary Support (GBS) refers to:

“The total amount of funds provided from the Central Government’s budget to finance the plan or developmental expenditure of ministries, departments, and public sector enterprises.”

It represents direct financial assistance from the Consolidated Fund of India and is distinct from funds raised through borrowings or internal resources of enterprises.

Components of Gross Budgetary Support

GBS generally comprises two major components:

1. Budgetary Support to Central Plans and Programmes:
   • Includes allocations to Central Sector Schemes (CSS) and Centrally Sponsored Schemes (CSSP) implemented by various ministries and departments.
   • Covers both capital and revenue components of expenditure.
2. Budgetary Support to Central Public Sector Enterprises (CPSEs):
   • Allocations made to CPSEs for implementing capital investment programmes and developmental projects.
   • This includes equity investments, grants, and loans extended by the government.

Thus, GBS = Budgetary Support to Ministries/Departments + Budgetary Support to CPSEs.

Features of Gross Budgetary Support

1. Provided from the Union Budget:It represents financial allocations made directly from the central government’s annual budget.
2. Used for Developmental Purposes:GBS funds are primarily utilised for schemes and projects with long-term developmental impacts such as infrastructure, agriculture, education, and health.
3. Includes Both Grants and Loans:GBS can be extended in the form of grants-in-aid, subsidies, or loans depending on the nature of the project or recipient agency.
4. Supports Plan Capital Formation:The major objective of GBS is to promote capital expenditure and create durable assets that enhance productive capacity.
5. Administered through Ministries:Each ministry or department receives GBS allocations for its approved schemes and projects, monitored by the Ministry of Finance and NITI Aayog.
6. Linked to Performance and Outcomes:In recent years, disbursement of GBS has been linked to outcome-based budgeting and project performance indicators.

Objectives of Gross Budgetary Support

1. To finance developmental and infrastructure projects of national importance.
2. To provide financial assistance to PSUs and departments for executing plan schemes.
3. To promote inclusive growth by funding social sector initiatives.
4. To ensure balanced regional development by supporting backward areas and states.
5. To enable effective implementation of flagship government programmes.

Sources of Financing

The Gross Budgetary Support is financed through the following sources:

• Tax Revenues: Including income tax, corporate tax, GST, customs, and excise duties.
• Non-Tax Revenues: Including dividends from PSUs, interest receipts, and user charges.
• Borrowings: Partly financed through market borrowings when fiscal deficit permits.

Distribution and Allocation

The allocation of GBS among ministries and sectors is determined during the annual budget formulation process, coordinated by:

• Ministry of Finance (Department of Expenditure)
• NITI Aayog (for development planning and monitoring)

GBS allocations are broadly divided among the following sectors:

1. Infrastructure (Transport, Energy, Communications)
2. Agriculture and Rural Development
3. Social Services (Education, Health, Housing, Sanitation)
4. Industry and Commerce
5. Science, Technology, and Environment

Relation between GBS and Internal & Extra-Budgetary Resources (IEBR)

In India’s budgeting framework, the total Plan or Developmental Outlay consists of two parts:

Total Developmental Outlay = GBS + IEBR
While GBS represents direct fiscal support, IEBR reflects additional funds raised outside the budget to expand the development expenditure envelope.

GBS in the Post-Planning Era

After the end of the Five-Year Plan system (from 2017–18 onwards), the concept of Plan Expenditure was replaced by Capital Expenditure and Revenue Expenditure, focusing on outcomes rather than plan categorisation.
However, the government continues to use the term GBS to denote the total budgetary allocation for:

• Central Sector Schemes (100% funded by the Centre)
• Centrally Sponsored Schemes (shared funding with States)
• Public Sector Investments (via CPSEs)

Thus, in the current framework, GBS effectively represents the developmental share of the Union Budget that contributes directly to capital formation and socio-economic programmes.

Recent Trends

• Over the years, GBS allocations have been progressively increasing in nominal terms, particularly for infrastructure, health, and rural development sectors.
• For instance, in Union Budget 2024–25, the Gross Budgetary Support to the Central Sector and CPSEs exceeded ₹12 lakh crore, marking a significant rise over previous years.
• The increase reflects the government’s emphasis on capital expenditure-led growth and infrastructure expansion under initiatives such as:
  • PM Gati Shakti (National Master Plan for Infrastructure)
  • Pradhan Mantri Awas Yojana (PMAY)
  • National Health Mission (NHM)
  • Smart Cities Mission

Importance of Gross Budgetary Support

1. Stimulates Economic Growth:GBS funds key investments in infrastructure, manufacturing, and technology sectors that drive economic expansion.
2. Promotes Inclusive Development:Supports welfare schemes and social sector programmes targeting poverty reduction, education, and healthcare.
3. Encourages Public Sector Investment:Provides capital support to PSUs for implementing large-scale industrial and energy projects.
4. Enhances Employment Generation:Infrastructure and public works funded through GBS create direct and indirect employment opportunities.
5. Improves Fiscal Planning:Helps the government manage and prioritise development expenditure systematically through the annual budget.

Challenges

1. Implementation Delays:Bureaucratic and procedural hurdles often delay fund disbursement and project execution.
2. Underutilisation of Funds:Many departments fail to fully utilise the GBS allocations due to poor planning or administrative inefficiencies.
3. Fiscal Constraints:Rising fiscal deficit limits the government’s ability to expand budgetary support.
4. Dependence on Borrowing:Heavy reliance on borrowing to finance GBS can increase public debt.
5. Lack of Monitoring:Weak monitoring and evaluation mechanisms affect the assessment of project outcomes.

Measures for Improvement

• Adoption of Outcome-Based Budgeting to link funds with measurable results.
• Strengthening of Public Financial Management Systems (PFMS) for real-time monitoring of fund utilisation.
• Greater coordination between Ministries, NITI Aayog, and Finance Ministry for efficient resource allocation.
• Regular performance audits by the Comptroller and Auditor General (CAG).
• Encouragement of Public–Private Partnerships (PPPs) to complement GBS in infrastructure projects.