Plan Expenditure in the Union Budget refers to the expenses incurred by the government in implementing various developmental schemes and programs. These expenditures are planned for a specified period, usually five years, and are aimed at promoting economic growth, reducing poverty, and improving social indicators. The planning process for Plan Expenditure is carried out by the Planning Commission of India, which formulates five-year plans in consultation with various stakeholders, including state governments and experts.
The Plan Expenditure of the Union Budget is divided into two parts: Central Plan Expenditure and Central Assistance to States and Union Territories Plan Expenditure.
- Central Plan Expenditure: It includes the expenditure on various developmental schemes and programs that are implemented by the Central government. Some of the major sectors that are covered under Central Plan Expenditure include agriculture, education, health, rural development, energy, and infrastructure. The Central Plan Expenditure is further divided into two parts: Gross Budgetary Support (GBS) and Internal and Extra Budgetary Resources (IEBR).
a) Gross Budgetary Support (GBS): GBS refers to the funds allocated by the Central government for various developmental schemes and programs. It includes both revenue and capital expenditure.
b) Internal and Extra Budgetary Resources (IEBR): IEBR refers to the funds that are generated by the Public Sector Undertakings (PSUs) and other agencies of the government through their own resources or through borrowings from the market. These funds are used to finance various developmental schemes and programs.
- Central Assistance to States and Union Territories Plan Expenditure: It includes the funds that are provided by the Central government to the state and union territory governments for implementing various developmental schemes and programs. The Central Assistance to States and Union Territories Plan Expenditure is further divided into two parts: Normal Central Assistance (NCA) and Additional Central Assistance (ACA).
a) Normal Central Assistance (NCA): NCA is provided to the states and union territories for implementing various developmental schemes and programs that are included in the Five-Year Plan. The funds are allocated to the states and union territories based on a formula that takes into account various factors such as population, area, and backwardness.
b) Additional Central Assistance (ACA): ACA is provided to the states and union territories for implementing specific projects and programs that are not included in the Five-Year Plan. The funds are allocated to the states and union territories based on the recommendation of the Planning Commission.
The allocation of Plan Expenditure is an important aspect of the Union Budget as it reflects the government’s priorities and policies for economic and social development. The allocation of funds to different sectors is based on various factors such as the government’s priorities, the needs of different regions and communities, and the overall economic situation of the country.