Union Budget 2016-17: Expenditure up 15.3% at Rs19,78,000 crore; no plan-non-plan classification from FY18

29 February 2016

Finance minister Arun Jaitley has projected total expenditure of Rs19,78,000 crore, which includes Rs5,50,000 crore under Plan and Rs14,28,000 crore under Non-Plan expenditures, in the general budget for 2016-17.  This is an increase of 15.3 per cent over current year budget estimates.

Jaitley said the Plan and Non-Plan classification will be done away with from fiscal 2017-18. He said successive committees have questioned the merit in having Plan and Non-Plan classification of government expenditure.

''A broad understanding over the years has been that Plan expenditures are good and Non-Plan expenditures are bad, resulting in skewed allocations in the Budget. This needs to be corrected to give greater focus to revenue and capital classification of government expenditure,'' Jaitley said, adding that the finance ministry will closely work with the state finance departments to align central and state budgets in this matter.

Presenting the General Budget 2016-17 in Lok Sabha today, Jaitley said that plan allocations reflect the government's firm commitment to substantially boost investment in agriculture, social sector, infrastructure and employment generation on the one hand and simultaneously sticking to the fiscal consolidation path.

This is substantiated by a huge 15.3 per cent jump in Plan outlay and 9 per cent increase in non-Plan outlay in 2016-17 over revised estimates (2015-16) while simultaneously conforming to the fiscal deficit target of 3.5 per cent. Besides the budget makes additional allocation to meet the obligations of 7th Pay Commission recommendation and implementation of one rank one pension (OROP) in defence have also been provided.

In revised estimates for 2015-16, the plan outlay at Rs4,77,197 crore is Rs11,920 crore more than the budget estimates. With minor reduction in Non-Plan expenditure, the total expenditure outlay in the revised estimates for 2015-16 at Rs13,08,194 crore is Rs7,914
crore more than the budget estimates. Accordingly, the fiscal deficit target stands at 3.9 per cent and this has been achieved without a reduction in expenditure outlay at revised estimates stage.

Since 2015-16, the devolution of states' share in taxes has witnessed a major jump in total resources being transferred to states, the total resources going to states, including the
devolution of state's share in taxes, Plan and Non-Plan grants/loans, and releases under centrally sponsored scheme is estimated at Rs9,11,330 crore in 2016-17, which is a jump of Rs99,846 crore over revised estimates of 2015-16 and Rs2,43,093 crore more than the actual 2014-15 spending.

The Plan estimates of 2016-17 have to be seen in the context of the revised funding pattern on the recommendations of the sub-group of chief ministers set up in NITI. As per the decision of the government, the existing funding pattern of schemes defined as 'core
of the core' have been retained.

The funding pattern of 'core' schemes, which also form part of the National Development agenda, will be shared 60:40 between the centre and the states (90:10 for the 8 North Eastern States and 3 Himalayan states).

For effective outcome based monitoring of implementation of the programmes and schemes and to ensure optimum utilisation of resources, an exercise to rationalise Plan and Non-Plan schemes of all ministries and departments had been undertaken. The existing programmes and schemes have been re-organised into outcome based umbrella programmes and schemes to avoid thin spread of resources.


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