Policy

Govt to do away with Plan, Non-Plan spending classification from 2017-18

Our Bureau New Delhi | Updated on January 20, 2018

bl23_Spending.eps





From 2017-18, the Central government expenditure will be classified only as capital and revenue spends, NITI Aayog Vice-Chairman Arvind Panagariya said on Wednesday.

The move is a part of the government’s decision to do away with the classification of Plan and Non-Plan expenditure.

In line with the government’s decision to dismantle the Planning Commission, the new spending classification will come at a time when the Five-Year Plan mechanism will also end. Instead, it will be replaced by a medium to long-term planning system under the NITI Aayog.

The classifications in the Union Budget 2016-17 for Centrally-sponsored schemes have already been changed to “core of the core”, “core” and “optimal”.

Improving quality

Economists have for long argued that Plan and Non-Plan classifications should be done away with and the focus should be on improving the quality of government spending by focussing on the end use of the funds.

In 2010, a panel led by the former Prime Minister’s Economic Advisory Council Chairman C Rangarajan had also suggested doing away with the artificial classification.

Plan expenditure, denotes the more productive use of government resources as investment in various programmes and schemes, but forms a small chunk of the total spending bill. Non-Plan expenditure, on the other hand, is the majority of the government spending and is used for interest payments, subsidies, wages and grants to States.

Published on June 22, 2016

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

null
This article is closed for comments.
Please Email the Editor