Taking forward the debate on the merits and demerits of removing the distinction between Plan and non-Plan expenditure, the Planning Commission, in a recent paper, has listed the possible solutions to the problem.
While one of the solutions could be the removal of the Plan, non-Plan distinction, an easier option would be to continue the existing classification with procedural modifications, the paper said.
Even though the Plan, non-Plan accounting distinction has created perverse incentives, distorted outlays and expenditure and generated anomalies at the field level, the underlying logic of identifying and focussing on channeling resources into core infrastructural and social sectors remain, the paper reasoned.
Application of this principle for firming up Plan sizes of states has helped maintain pressure on them to raise resources, it said. The question is whether planning for development can be effected and monitoring done after Plan, non- Plan accounting is abandoned.
Removal of the distinction will imply defining the Plan in terms of budgetary heads of account grouped together in terms of developmental functions for planning and monitoring purposes so that maintenance, upgradation and repair of assets and full staff support can be provided with no pressure to create fresh schemes, the paper said.
It added that the process could be started by including only schemes in which the Plan component is merely extended coverage of an existing programme, that is schemes in which there is no design difference between the Plan and non-Plan account.
Alternatively, the Plan, non-Plan distinction could continue but changes could be introduced to make it less distorting.
Here, too, the paper said, schemes in which there is only extended coverage without design change under the Plan account should be fully brought under the Plan.
This will inflate the Plan size in the year in which the procedure is introduced.
To reduce distortions, the paper suggestion that the Planning Commission should examine availability of adequate non-Plan support for schemes that span both sides.