FY17 Plan spending up 15%, FY16 expenditure too hiked by 2.6%

Government hiked Plan expenditure for next fiscal by 15.3 per cent to over Rs 5.5 lakh crore and also increased the revised estimate spending for this fiscal to over Rs 4.77 lakh crore compared to budgeted Rs 4.65 lakh crore.
It has been a practise for some years to cut budgeted Plan expenditure at the revised estimate stage to keep a tab on burgeoning fiscal deficit. In the last Budget, the government had cut Plan spending by Rs 1,07,066 crore at revised stage.
Plan expenditure entails government spending on social welfare schemes and asset creation. However, the government today announced doing away with Plan and Non-Plan classification from 2017-18 as next fiscal will be the terminal year of 12th Five Year Plan (2012-17).

"We have increased our Plan expenditure at the RE (revised estimate) stage in 2015-16 in contrast to the usual practice of reducing it. We achieved this despite adopting the 14th Finance Commission recommendations which increased devolution to the states by 55 per cent," Finance Minister Arun Jaitley said in the Budget speech.
He said the total expenditure in the Budget for 2016-17 has been projected at Rs 19.78 lakh crore, consisting of Rs 5.50 lakh crore under Plan and Rs 14.28 lakh crore under Non-Plan classification.
He also said the increase in Plan expenditure for next fiscal is 15.3 per cent over current year budgeted estimates.

Plan Allocations have given special emphasis to sectors like agriculture, irrigation, social sector including health, women and child development, welfare of Scheduled Castes and Scheduled Tribes, minorities, infrastructure, etc.

Continuing with the policy of more financial autonomy to states, the total resources being transferred to them are Rs 99,681 crore more over revised estimates of 2015-16 and Rs 2,46,024 crore more over actuals of 2014-15, he added.
"A broad understanding over the years has been that Plan expenditures are good and Non-Plan expenditures are bad. This results in skewed allocations in the Budget. We need to correct this and give greater focus to Revenue and Capital classification of Government expenditure," Jaitley said.

To improve the quality of government expenditure, every new scheme will have a sunset date and outcome review.