To suggest action plan for abolition of the present system of classifying public expenditure as Plan and non-Plan

The Planning Commission on Tuesday announced the setting up of an 18-member expert committee headed by Prime Minister's Economic Advisory Council (PMEAC) Chairman C. Rangarajan to recommend measures for efficient management of public expenditure.

Among its terms of reference, the main brief of the high-level committee is to suggest an action plan for abolition of the present system of classifying public expenditure as Plan and non-Plan. This will include detailing of the changes in the mandate of the various organisational units in the government that deal with allocation of public resources and the management of public expenditure.

According to an official statement here, the XI Plan (2007-12) document has dwelt at length on the various anomalies and inconsistencies arising out of the present classification of expenditure into Plan and non-Plan categories which have hindered efficient management of public resources.

The committee has also been mandated to clearly define the scope of the public sector Plan and the expenditures incurred there under, keeping in view the changes in the administrative machinery for implementation of the Plan, and the new mechanisms that have evolved such as special purpose vehicles (SPVs) and public-private partnerships (PPPs).

These apart, the committee will suggest a proper framework for taking a comprehensive view of the total transfer of resources from the Centre to the States, including ensuring its accounting and reporting in a uniform manner.

Another significant clause in the terms of reference is that the committee will have to examine the classification of expenditure into ‘Revenue' and ‘Capital' in the context of the constitutional provisions, and requirements under the Fiscal Responsibility Acts, and suggest measures to address the inconsistencies in the current system of classification so as to ensure rational and efficient public expenditure management.

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