Budget 2017-18: Panel to examine merger of Plan & non-Plan expenditure

Railways, FinMin officials asked to appear before Estimates Committee on Oct 20

Estimates Committee of Parliament headed by BJP veteran Murli Manohar Joshi will examine the issue of merger of Plan and non-Plan expenditure in the Budget on Thursday.

Representatives from Railways and finance ministry have been called to appear before the panel on October 20 almost a month after the Union Cabinet on September 21 gave a go ahead to merger of the Plan and the Non-Plan classification in the Budget and Accounts along with giving its nod for the merger of Railway budget with the General Budget and the advancement of the date of Budget presentation from the last day of February.

All these changes have to be put into effect simultaneously from the Budget 2017-18. The merger of Plan and Non Plan classification in Budget and Accounts is expected to bring an ease in resource allocation and its monitoring.

The government was of the view that the Plan/Non-Plan bifurcation of expenditure leads to a fragmented view of resource allocation to various schemes, making it difficult not only to ascertain cost of delivering a service but also to link outlays to outcomes.

It was also felt that the bias in favour of Plan expenditure by Centre as well as the state governments has led to a neglect of essential expenditures on maintenance of assets and other establishment related expenditures for providing essential social services.

Under the non-plan expenditure the government used to earmark fund salaries, subsidies, loans and interest, whereas the plan expenditure was allocated for developmental projects and capacity building.

The government believes that the merger will enable it to provide appropriate budgetary framework having focus on the revenue, and capital expenditure.

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A committee chaired by a special secretary-level officer was set up in the finance ministry last year to look into the issue. Earlier in 2011, an expert committee headed by C Rangarajan had made a proposal for abolishing the distinction between Plan and non-Plan expenditure for both the Centre and the states.

Meanwhile the Parliamentary panel headed by Joshi has called before it the representatives of the Ministry of Finance, Department of Economic Affairs, Expenditure and Ministry of Railways as well as Railway Board, in connection with the examination of the subject.