The Plan and Non-Plan classification will be done away with from fiscal 2017-18. This was stated by the Union Finance Minister Shri Arun Jaitley while presenting the General Budget 2016-17 in Lok Sabha today.Shri Jaitley said that 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. Mr. Jaitley said that the Finance Ministry will closely work with the State Finance Departments to align Central and State Budgets in this matter.  

Plan and Non-Plan classification removal shifts budgetary focus to Revenue and Capital classification and alignment. The government announced abolition of the Plan and Non-Plan classification to be replaced by a Revenue and Capital classification, aiming to correct allocation distortions and requiring coordination between the Finance Ministry and State finance departments for aligned budget presentation and fiscal reporting.