Non-Plan Expenditure means expenses for running one's house. Non-Plan Expenditure of the Central Government are mainly as under :-

(i) Interest Payment Liability.
(ii) Defence
(iii) Pay
(iv) Pension
(v) Subsidies
(vi) Grants

The Central Government is not able to meet Non-Plan Expenditure from its Revenue-Receipts and other income receipts & it has to borrow funds every year to meet (Non-Plan Expenditure). The entire Plan expenditure is from the borrowed funds. The following figures indicate how much amount the Central Government had to borrow every year to meet Non-Plan Expenditure.

Table 2.2, Page No.24 of Indian Economic Survey 2002-2003 has given figures of Revenue-Receipts of Central Government namely :- 1. (i) Tax revenues (net of states share). (ii) Non-Tax revenue. 2. Revenue expenditure. 3. Revenue deficit., which are produced in charts to show that the Government had to borrow every year to meet nation's day to day expenses described as above. The entire plan expenditure is from borrowed funds.

Fiscal Deficit means :-

Rs. Plan Expenditure
+ Rs. Non-Plan Expenditure
= Rs. x
- Rs. Revenue Receipts
= Rs.
- Rs. Recovery of Loans by the Government
- Rs. Other receipts -mainly PSU Disinvestments.
-------------------------------------------------
= Rs. Z Fiscal Deficit

The figures of fiscal deficit are as under for the year 1990-91 to 2003-04.

The fiscal deficit can be reduced provided decisions are taken on the economic grounds only and not on political grounds. India faced worst position in 1991-92, when India had only 3 months Foreign Exchange. The credit goes to Hon'ble Finance Minister Shri Manmohansingh, who had tried to correct the path. However, Dr. Chelliah Committee's Report was not fully implemented. It was implemented in reduction of tax rate from 55% to 30%, but number of suggestions to remove exemptions and deductions were not implemented. On the contrary, during the period of 1991-92 to 2003-04, the four Finance Ministers granted more & more deductions, reduced revenue receipts, granted increased pay, allowances and pension and so increased fiscal deficit and revenue deficit.

The Fiscal Deficit which was Rs.37,606 crores in 1990-91 has increased to Rs.1,53,000 crores (estimated) for year 2003-04. The entire fiscal deficit is man made deficit during the tenure of the four Finance Ministers, the burden of Interest - Payment - Liability was termed as past legacy and no concrete steps were taken to reduce interest payment liability. On the contrary, the steps were so taken that revenue receipts had decreased and non-plan expenses increased.

In the following pages the Author has tried to show the remedies to decrease Interest Payment Liabilities, decrease burden of Pay, Pension, Subsidies and increase revenues. An attempt is made and suggestions are made with regard to personal taxation only. The steps can be considered and implemented with regard to corporate taxation, excise, custom so that deficit which is 5.9% of G.D.P. in 2002-03 can be brought down to 2% of G.D.P.