Difference between Plan & Non-plan Expenditure

The term expenditure describes a payment made in cash or on credit to buy or obtain goods or services. Liabilities incurred in the exchange of commodities or services are referred to as expenditures.

What is Plan Expenditure?

The expenditure incurred on the programmes that are detailed in the current five-year plan of a country is known as Plan Expenditure. For example, expenditure on energy, irrigation, communication, transport, agriculture and allied activities, social services, etc. In simple terms, plan expenditure shows the expenditure that needs to be incurred on Central Assistance for State and Union Territory, and the Projects covered under the Central Plans.

What is Non-plan Expenditure?

The expenditure incurred on programmes that are other than those detailed in the current five-year plan of a country is known as Non-plan Expenditure. For example, expenditure on defence services, payment of interest, expenditure on administrative services, etc. Non-plan expenditures are a must for every country because they are incurred on the routine functioning of the government.

Classification of an expenditure as Plan and Non-plan Expenditure

If an expenditure arises due to a planned proposal, it is said to be a Plan Expenditure.

If an expenditure arises out of the scope of the government plans, it is said to be a Non-plan Expenditure.

Difference between Plan Expenditure and Non-plan Expenditure

Basis	Plan Expenditure	Non-plan Expenditure
Meaning	The expenditure incurred on the programmes that are detailed in the current five-year plan of a country.	The expenditure incurred on programmes that are other than those detailed in the current five-year plan of a country.
Incurred on	Plan expenditures are spent on the current development and investment outlays.	Non-plan expenditures are spent on the routine functioning of the government.
Arises when	Plan expenditures arise only when the plans say so about such expenditures.	Non-plan expenditures are a must for every economy and the government cannot escape itself from these expenditures.
Example	Expenditure on energy, irrigation, communication, transport, and agriculture.	Expenditure on defence services, payment of interest, expenditure on administrative services.