There are two components of expenditure - plan and non-plan. Of these, plan expenditures are estimated after discussions between each of the ministries concerned and the Planning Commission.

Non-plan revenue expenditure is accounted for by

• interest payments,
• subsidies (mainly on food and fertilisers),
• wage and salary payments to government employees,
• grants to States and Union Territories governments,
• pensions,
• police,
• economic services in various sectors,
• other general services such as tax collection,
• social services, and
• grants to foreign governments.

Non-plan capital expenditure mainly includes defence , loans to public enterprises,and loans to States, Union Territories and foreign governments.

The Plan and Non-Plan classification was done away with from fiscal 2017-18. Now emphasis is on Revenue and Capital expenditure.