New expenditure classification in the Union Budget

Budget 2017 to classify the government's spending as revenue expenditure and capital expenditure

The coming Union Budget will be the first to classify the government’s spending as revenue expenditure and capital expenditure. To make it easier for comparison, the budget documents will also provide the 2016-17 Budget figures and 2015-16 actual spending under the new classification.

A report by Parliament’s Committee on Estimates, presented in early December, includes a ‘dummy’ Budget provided to it by the finance ministry. This had reclassified the allocations and spending of the ministry of communications and information technology for budgeted 2016-17, budgeted and revised 2015-16 and the actuals of 2014-15. This is the format to be followed for the coming Budget.

The current plan and non-plan classification existed because of the erstwhile Planning Commission’s five-year schedules for the economy, known as plan periods. The 12th plan period will end in March 2017. The government believes this classification gave a fragmented view of resource allocation, creating difficulties in ascertaining the cost of delivery of services and the link between outlays and outcome.

It had told the Committee on Estimates that the change would be better at tracking the taxpayer’s money.

Additionally, to better gauge the results of money spent, the centrally sponsored schemes, monitored currently on the parameters of input, activity and output, will be monitored on outcome and impact as well.

The Budget will be presented on February 1, a month earlier than past practice, and will also be the first to merge the Rail Budget into itself.