Abolish capital, revenue expenditure distinction: FRBM Head

Gaurav ChoudhuryMoneycontrol Bureau The distinction between the government’s capital and revenue expenditure should be abolished, Fiscal Responsibility and Budget Management (FRBM) review committee head and former revenue secretary NK Singh said.

“The FRBM panel had debated the abolition of the distinction between revenue and capital expenditure…We could not do it,” Singh said at CNBC TV18 and Mint’s conclave, Budget Verdict, on Wednesday.

Singh said that the FRBM panel recommended that the components of what goes into capital and revenue expenditure should be “re-worked” and “re-thought”, on similar lines of how plan and non-plan expenditures in the Budget have been merged.

“…because the expenditure, for instance, on education and health, if transferred to the states, is counted as revenue expenditure. But that deserves reconsideration,” he added.

Last year, Finance Minister Arun Jaitley said that there will be no distinction between plan and non-plan expenditure from 2017-18.

The government’s non-plan expenditure would refer to salaries, subsidies, loans and interest, while plan expenditure includes a specific amount that is set aside and allocated towards various projects, across ministries.