UPSC Prelims 2014 Q100: Indian Economy – Fiscal Policy & Budget
With reference to Union Budget, which of the following is/are covered under Non - Plan
Expenditure?
1. Defence expenditure
2. Interest payments
3. Salaries and pensions
4. Subsidies
Select the correct answer
using the code given below.
- (a) 1 only
- (b) 2 and 3 only
- (c) 1, 2, 3 and 4
- (d) None
Answer: (c) 1, 2, 3 and 4
Explanation
Non-Plan Expenditure (as in 2014)
Until 2016-17, the Union Budget split spending into Plan and Non-Plan.
Non-Plan covered the routine, committed spending of the Government.
| Item | Non-Plan Expenditure? |
|---|---|
| 1. Defence expenditure | Yes |
| 2. Interest payments | Yes (the largest item) |
| 3. Salaries and pensions | Yes |
| 4. Subsidies | Yes |
Plan and Non-Plan compared:
| Type | Meaning | Examples |
|---|---|---|
| Plan | Spending on schemes of the Five-Year Plan | Central schemes, central assistance to State plans |
| Non-Plan | Everything else | Interest, defence, subsidies, salaries, pensions, police |
Note: the Plan and Non-Plan split was abolished from 2017-18.
The Budget now shows only Revenue and Capital expenditure.
Answer: (c) 1, 2, 3 and 4.
Why each option is right or wrong
- (a) Incorrect. Interest, salaries, pensions and subsidies were also Non-Plan.
- (b) Incorrect. Defence expenditure and subsidies were also Non-Plan.
- (c) CORRECT. Defence, interest payments, salaries and pensions, and subsidies were all Non-Plan.
- (d) Incorrect. All four were covered, so 'None' is wrong.
Key point
Non-Plan expenditure (till 2016-17): interest payments, defence, subsidies, salaries, pensions. The Plan/Non-Plan split ended in 2017-18.
Remember
Non-Plan: interest, defence, subsidies, salaries, pensions.
Common mistakes
- Thinking defence was Plan expenditure because it builds assets.
- Forgetting that interest payments were the biggest Non-Plan item.
- Using the old split for a present-day Budget question.
Exam tip
Non-Plan = running costs of the Government. The split no longer exists.
Sources
- Ministry of Finance — Union Budget 2014-15: Expenditure Budget
- Ministry of Finance — Union Budget 2017-18 (merger of Plan and Non-Plan classification)