Re-planning of plan expense?

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The notion of plan and non-plan expenditure — a separation of categories that Dr C. Rangarajan, the head of the Prime Minister’s Economic Advisory Council, would like to end — owes to the concept of the welfare state which dawned about 80 years ago, and the public expenditure that goes with it. Post-Independence India too saw huge amount of money being spent as public expenditure.
An expert group under the chairmanship of Dr C. Rangarajan was set up to examine the efficacy of the current system of public spending.
In its report, that became available recently, the committee has suggested that the distinction between plan and non-plan expenditure be done away with, as current processes have stymied the focus and priority.
There is no constitutional requirement to divide the public expenditure between plan and non-plan. The report points out that it was for the purpose of better utilising the limited resources that the first government of Independent India adopted the system of planning in public expenditure.
Initially, it was mainly done for capital expenditure — to create assets, both physical and human.
But the expert committee in its study believes that the system has of late become dysfunctional, and jeopardised national priorities.
The report has concluded that irrespective of the intention with which the categorisation in planned expenditure was mooted, over a period of time a general perception has emerged that all non-plan expenditure, despite it being an obligation, is bad, and all plan-expenditure, which is made only with the left over money, is good.
This “good-bad” distinction has lured managers in the government to overlap, and push even bad expenditures like subsidy to the plan kitty. This has made the entire budget-making process opaque.
However, if the expenditure is put under one head, the report is of the view that this will facilitate linking expenditure to outcomes, and obtain better management of state resources. A member of the Planning Commission said, “Plan expenditure has its role in a country like India, where resources are not in abundance and a sizeable population lives below the poverty line. The aberrations in the plan process should be weeded out, but to suggest that the plan budget in itself is an aberration would not be correct.”