Govt planning abolition of Plan and Non-Plan segmentation of expenditure
Updated: Dec 09, 2015 03:02:47pm
New Delhi, Dec 9 (KNN) Government may do away with classification of public expenditure in Plan and Non-Plan categories from the next budget itself. Addressing a meeting of state finance secretaries, Union Finance Secretary Ratan Watal said the classification is losing its significance after abolishing the Planning Commission and states could also deliberate on the same.
Plan and Non- Plan categorisation of expenditure is the epitome of Nehruvian model of planned economy. Any new programme or scheme or project is taken under planned expenditure whereas expenditure on maintenance, operation and carry forward of existing Government assets and establishments is taken under Non- Plan expenditure. While the Plan expenditure are the holy cow of Union budget, the Non-plan expenditures are considered to be wasteful and restricted and curtailed to the maximum extent. So, no prize for guessing why existing roads, Government buildings and all assets are in a poor state of upkeep.
"In the backdrop of the abolition of Planning Commission and setting up of NITI Aayog, the classification of expenditure as plan and non-plan is in the way of losing its relevance. If the accounting of expenditure is classified broadly under revenue and capital...I think this is where the focus is," Watal said in his address.
While the system of classification of expenditure may have been useful during the era of command economy, in the current era of economic uncertainty and global turmoil, they have little utility. Negative fallout is Government departments and agencies always try for renewal of existing programme and schemes as “Plan” programmes to get more flexibility in operation and of course more budget to run. This is one of the reasons for plethora of schemes run by the Government, which Modi Government want to prune drastically.
Industry sources generally welcomed the initiative of Government. There should be sufficient flexibility in Government expenditure and artificial compartmentalisation of budget have not served any purpose, said, a senior executive of FISME, the leading federation of MSMEs. Overhauling an existing equipment, may be more economic for the Government than going for a new purchase and if budget for such work is not available, being in the Non–Plan category, it will be a loss to public exchequer, he said.
In fact, FISME for quite some time has been advocating for complete transparency in public procurements and adopt double entry book keeping for all Utilities of State and Central Government. With abolition of the Plan, Non-Plan categorisation, that should be the next logical step to streamline Government expenditure. (KNN/ DB)
Plan and Non- Plan categorisation of expenditure is the epitome of Nehruvian model of planned economy. Any new programme or scheme or project is taken under planned expenditure whereas expenditure on maintenance, operation and carry forward of existing Government assets and establishments is taken under Non- Plan expenditure. While the Plan expenditure are the holy cow of Union budget, the Non-plan expenditures are considered to be wasteful and restricted and curtailed to the maximum extent. So, no prize for guessing why existing roads, Government buildings and all assets are in a poor state of upkeep.
"In the backdrop of the abolition of Planning Commission and setting up of NITI Aayog, the classification of expenditure as plan and non-plan is in the way of losing its relevance. If the accounting of expenditure is classified broadly under revenue and capital...I think this is where the focus is," Watal said in his address.
While the system of classification of expenditure may have been useful during the era of command economy, in the current era of economic uncertainty and global turmoil, they have little utility. Negative fallout is Government departments and agencies always try for renewal of existing programme and schemes as “Plan” programmes to get more flexibility in operation and of course more budget to run. This is one of the reasons for plethora of schemes run by the Government, which Modi Government want to prune drastically.
Industry sources generally welcomed the initiative of Government. There should be sufficient flexibility in Government expenditure and artificial compartmentalisation of budget have not served any purpose, said, a senior executive of FISME, the leading federation of MSMEs. Overhauling an existing equipment, may be more economic for the Government than going for a new purchase and if budget for such work is not available, being in the Non–Plan category, it will be a loss to public exchequer, he said.
In fact, FISME for quite some time has been advocating for complete transparency in public procurements and adopt double entry book keeping for all Utilities of State and Central Government. With abolition of the Plan, Non-Plan categorisation, that should be the next logical step to streamline Government expenditure. (KNN/ DB)
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