The planning omission PDF Print E-mail
Saturday, 03 September 2011 00:00
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Is expenditure on a school important in only a block of 5 years in which it is set up, or does it continue to remain important in later years? Ditto for hospitals, irrigation projects, roads, ports, etc. You’d think it makes no difference, but in the curious classification system adopted by India, in the 5-year block in which the school is set up, all expenditure on it, including salaries, is categorised as Plan expenditure; in later years, the expenditure on running the school is non-Plan—and we all know how, in each Budget, the pride of place is given to the increase in Plan expenditure. So it’s just as well that the Rangarajan report on efficient management of public expenditure has recommended doing away with this distinction. Since some amount of revenue expenditure—grants to states for instance —are partly used to create capital assets, the government will get some flexibility on this. So you might get a lower revenue deficit this year even though revenues are sluggish. Once the report is accepted, you will have only capital (investment) and revenue (recurring) expenditures. This still leaves untouched a large chunk of expenditure on interest, subsidies and defence—70% of the total non-plan expenditure of R816,182 crore in 2011-12. Reforms are needed here too.


A related issue is that of the Planning Commission once Plan expenditure ceases to be relevant—perhaps it will be used for strategic planning? Going further, the committee has said states can abandon their yearly visits to the Yojana Bhawan to approve their state plans, as there will not be any. All transfers of funds from the central government to the states and local bodies will now be channeled through the controller general of accounts under the ministry of finance through a nationally computerised system of release.

Another major recommendation is to move over to a new multi-dimensional budget and accounting classification to overcome the limitations of the current classifications, which makes it difficult to generate scheme-wise information and ensure tracking of expenditure to the last level of implementation. Such a move will also put the information on fund utilisation in the public domain, ensuring greater transparency in governance.

Last Updated ( Friday, 25 November 2011 09:14 )

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