•   All expenditures done in the name of planning (i.e. Five Year Plans) were called plan expenditures.

•   For example expenditure on electricity generation, irrigation and rural developments, construction of roads, bridges, canals, etc.

•   This is essentially the budget support to the Central Plan and the Central assistance to State and Union Territory plans.

•   This is also split into revenue and capital components.

All expenditures other than plan expenditure were known as non-plan expenditure. For example interest payments, pensions, statutory transfers to States and Union Territories governments, etc

• Non-Plan Expenditure is largely the revenue expenditure of the government, although it also includes capital expenditure. It covers all expenditure not included in the Plan Expenditure.
• Non-Plan Expenditure constitutes the biggest proportion of the of the government’s total expenditure. The biggest items of Non-Plan Expenditure are interest payments and debt servicing, defence expenditure and subsidies. For defence services, both revenue and capital expenditure are incurred.

Non-plan expenditures include non- developmental expenditure (interest payment, subsidies, defence expenditure, civil administration), developmental expenditure and expenditure incurred on projects which remained unfinished in the earlier plans.

•   A subsidy or government incentive is a form of financial aid or support extended to an economic sector generally with the aim of promoting economic and social policy.

•   It can be direct (such as cash payments) or indirect (such as tax breaks).

•   The most common forms of subsidies are those to the producer or the consumer.

•   An export subsidy is a support from the government for products that are exported, as a means of assisting the country's balance of payments.

•   Interest payments are the cost of borrowing money.

•   The borrower makes these payments in addition to paying back the principal on a loan.

•   Interest payments are paid on a regular schedule and at an annual interest rate that was agreed to when the loan was initiated.