Question

What is the basis of classifying government expenditure into plan expenditure and non-plan expenditure.

Answer 1

Aspect	Plan Expenditure	Non-Plan Expenditure
Nature	Expenditure related to the development plans and schemes of the government (especially Five-Year Plans).	Expenditure incurred for routine functioning of the government and maintenance of existing services.
Purpose	For implementing developmental programmes and projects.	For normal activities like administration, defence, subsidies, and interest payments.
Objective	To promote economic growth, development, and modernisation.	To maintain ongoing government services and commitments.
Scope	Planned expenditure on sectors like infrastructure, agriculture, education, health, etc.	Salaries, pensions, subsidies, interest on loans, maintenance of services, defense expenditure, etc.
Coverage	Includes capital as well as revenue expenditure related to planned development.	Primarily revenue expenditure for routine functioning; can also include capital expenditure not linked to plans.
Relation with Five-Year Plans	Directly related to the Five-Year Plans of the government.	Not related to five-year plans.
Examples	Construction of roads, dams, and hospitals under five-year plans.	Expenditure on defence, salaries, pensions, subsidies, and interest payments.
Impact on Economy	Expected to increase productive capacity and promote long-term growth.	Helps in running the administration smoothly but does not directly contribute to productive capacity.