Plan, non-plan expenses may be merged

The government is looking at ways to do away with the distinction between plan and non-plan expenditure.

Cabinet Secretary B K Chaturvedi has called for a meeting between the secretaries in Planning Commission and the finance ministry to discuss how to handle the distinction.

The Planning Commission has prepared a paper on the issue, which will be considered and cleared by the internal Planning Commission before it is taken up at the Committee of Secretaries level.

The paper highlights the problem areas which need to be looked into in the plan and non-plan distinction, but says some form of distinction would have to continue.

The distinction between plan and non-plan expenditure was not introduced as a result of an accounting exercise. It was introduced in order to differentiate between the areas the Planning Commission looked at and those that it did not examine, says the paper.

"The Planning Commission, as the body which intermediates between departments at the Centre and between the Centre and states, was to look at allocations and expenditure patterns in areas of concern to these groups," said an official in the plan body.

Areas, particularly in the social sectors, where long-term perspectives were needed and monitoring was crucial, should be earmarked for the Planning Commission to oversee, the official added.

Making a case for restructuring the way expenditures are classified, the paper says social sector related programmes, which need to be stringently monitored, should be kept under the plan body's purview.

"Expenditure on these sectors, where a whole and long-term view needs to be taken, would have to be monitored by the Planning Commission," the official said.

The rest could be kept out of it's purview," the official said, adding that the terminology could be altered and called developmental and non-developmental expenditure.

The paper, which is expected to be discussed in the internal Planning Commission meeting next week, also says the Finance Commission should not be allowed to make grants for social and development related issues.

The mandate of the finance commission, is to make allocations for strengthening institutional setups like the police and Panchayati Raj institutions. The job of allocating for development related issues is with the Planning Commission.

Paper plans

The paper will be considered and cleared by the internal Planning Commission before it is taken up at the Committee of Secretaries level

The paper highlights the problem areas which need to be looked into in case of the distinction, but says some form of distinction will have to continue

Areas, particularly in the social sectors, where long-term perspectives are needed, should be earmarked for the Plan panel to oversee, the paper states

The paper says the finance commission should not be allowed to make grants for social and development related issues