Panel for removing distinction between Plan, Non-Plan expenses

The panel headed by Chairman of the Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan said that all public expenditure should be split into 'capital' and 'revenue' expenditure.

While the Planning Commission should be responsible for formulation of the Five-Year Plan, the task of firming up annual budgets should be entrusted to the Finance Ministry based on inputs from the Plan panel, it said.

The report said that Commission should dispense with the exercise of approving annual Plans of states. The Commission, it added, could hold a strategy or review meeting with representatives of the states.

These recommendations were made by the committee which was constituted by the government in April last year to suggest steps to improve management of the public expenditure.

"Plan and Non-Plan distinction in the budget is neither able to provide a satisfactory classification of developmental and non-developmental dimensions of government expenditure nor an appropriate budgetary framework. It has therefore become dysfunctional

"The committee, therefore, recommends that Plan and Non-Plan distinction in the budget should be removed", it said.