With reference to Plan and Non-Plan expenditure in the context of Indian public finance, consider the following statements: 1. Plan expenditure generally refers to asset-creating and productive spending. 2. The distinction between Plan and Non-Plan expenditure was introduced based on the recommendations of the C. Rangarajan Committee. 3. Non-Plan expenditure includes items like maintenance of assets such as hospitals and schools, which are vital for development but often receive less priority during budget cuts. Which of the statements given above is/are correct? |ForumIAS

[A] 1 and 2 only

[B] 1 and 3 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: B

Notes:

Explanation:

Plan expenditure covers productive, asset-building activities such as infrastructure, economic development projects, and schemes under planning.
The Plan–Non-Plan classification was introduced based on the Sukhomoy Chakravarty Committee in 1987–88, not the Rangarajan Committee.
Non-Plan expenditure includes necessary but often neglected areas like maintenance of schools, hospitals, and dams, which despite being critical for development, receive less priority especially during austerity or fiscal consolidation.

Source- TMH Indian Economy by Ramesh Singh

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