Budget 2021: What is difference between plan and non-plan expenditure?

FPJ Web DeskUpdated: Sunday, January 24, 2021, 01:37 PM IST
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Budget 2021: What is difference between plan and non-plan expenditure? | FPJ

The Halwa ceremony, marking the final stage of the Budget making process, was held in North Block on Saturday afternoon in the presence of Union Finance and Corporate Affairs Minister Nirmala Sitharaman.

The Budget for FY22 will come against the backdrop of an economic contraction of 7.7 percent, the first time in the history of independent India. So, all stakeholders have great expectations from the upcoming Budget, which could provide a healing touch to the pandemic-battered economy and push growth.

Even Finance Minister Nirmala Sitharaman last month promised a 'never before' like Union Budget to the people of India.

This will be the first time since independence that physical copies of Budget documents will not be shared with MPs to avoid the risk of COVID-19 infection, the sources said, adding all MPs will get soft copies of the Budget and Economic Survey.

The familiar sight of trucks loaded with budget papers in Parliament on the budget day and scanning of these by the security guard will also be given a miss.

As the count down for the Union Budget 2021 has begun with this Halwa ceremony, we decided to help you understand the few terms from the budget glossary.

In this article, we will help you understand the difference between plan and non-plan expenditure. Although the government had done away with the distinction between plan and non-plan expenditure in the budget, one must study both these terms.

Non-plan expenditure

Non-plan expenditure is what the government spends on the so-called non-productive areas, such as salaries, subsidies, loans and interest. Non-plan capital expenditure mainly includes defence, loans to public enterprises, loans to States, Union Territories and foreign governments

Plan Expenditure

Plan expenditure pertains to the money to be set aside for productive purposes, like various projects of ministries. They are estimated after discussions between each of the ministries concerned and the Planning Commission.

As per the finance ministry officials, the government decided to do away with the distinction because of the abolition of the Planning Commission, the relevance of plan and non-plan expenditure was lost.

(With inputs from agencies)

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