BW Communities

Remove Plan, Non-Plan Expenses' Distinction: Panel

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[In a recommendation that can have far-reaching implications on public finances, a high-level panel said on Thursday the government should do away with the distinction between Plan and Non-Plan expenditure and redefine roles of the Planning Commission and the Finance Ministry. The panel headed by Chairman of the Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan said that all public expenditure should be split into 'capital' and 'revenue' expenditure. While the Planning Commission should be responsible for formulation of the Five-Year Plan, the task of firming up annual budgets should be entrusted to the Finance Ministry based on inputs from the Plan panel, it said. The report said that Commission should dispense with the exercise of approving annual Plans of states. The Commission, it added, could hold a strategy or review meeting with representatives of the states. These recommendations were made by the committee which was constituted by the government in April last year to suggest steps to improve management of the public expenditure. "Plan and Non-Plan distinction in the budget is neither able to provide a satisfactory classification of developmental and non-developmental dimensions of government expenditure nor an appropriate budgetary framework. It has therefore become dysfunctional "The committee, therefore, recommends that Plan and Non-Plan distinction in the budget should be removed", it said. While releasing the report, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: "I do think that the distinction between Plan and Non-Plan is artificial. If we want to move towards budgeting that is based on evaluating outcomes, it is not useful only to focus on planned expenditure." Under the current dispensation, all government expenditure is split into Plan and Non-Plan. Plan expenditure generally signifies expenses taken up for development schemes, while Non-Plan deals with essential outlays pertaining to debt repayment, salary and other administrative expenditure. The report suggested a basic shift in budgeting approach from "one-year horizon to a multi-year horizon and from input based budget to outputs and outcomes". As regards the new roles of key entities, it said, the Planning Commission should be made "responsible for consolidation of Five-Year Plan over all services based on the input from the Ministry of Finance...(while) Ministry of Finance (be) made responsible for the preparation of Annual Budget based on the inputs from the Planning Commission". The report also called for modification in accounting classification with a view to strengthening the framework for transfer of funds from centre to the states. "The proposed classification should provide uniform codes for central programmes, sub-programmes and schemes being implemented in the states," it added. The report also called for strengthening the Central Plan Monitoring System (CPMS) and empowering the citizens to seek information on flow of resources and utilisation with a view to promoting transparency and accountability. (PTI)