Govt to abolish Plan, non-Plan expenditure classifications

The finance ministry is considering a proposal to abolish Plan and non Plan classifications of expenditure from 2017-18 onwards, and to switch to ‘capital’ and ‘revenue’ spending classifications, finance secretary Ratan Watal said on Tuesday.

The move will link government spending to its eventual outcome more effectively. If implemented, it will be in force after the conclusion of the 12th Five Year Plan (2012-17). This can be taken to imply that the five-year plan structure will end with the 12th Plan.

“In the backdrop of the abolition of the Planning Commission and setting up of the 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 expenditure is focused,” said Watal at a meeting of finance secretaries of states and Union territories.

The secretary said a committee headed by a special secretary-level officer has been set up in the finance ministry to look into the transition.

In 2011, an expert committee headed by C Rangarajan had proposed the distinction between Plan and non-Plan expenditure be abolished for both the Centre and the states.