Difference between Development and Non-development Expenditure.

(i)    Developmental expenditure. It refers to expenditure on activities which are directly related to economic and social development of the country. For instance, expenditure incurred on education, health, housing, agricultural and industrial development, rural development, social welfare, scientific research, etc. are treated as development expenditure. It also includes plan expenditure of Railway, Post and Telecommunications, Non-departmental commercial undertakings.
(ii)    Non-developmental expenditure. It refers to government expenditure incurred on essential general services of routine nature like defence, administration, etc. Such expenditure is essential from administrative point of view. For instance, expenditure on police, judiciary, defence, general administration, interest payment, tax collection, subsidies on food, etc. are treated as non-developmental expenditure. Agreed non-developmental expenditure does not contribute directly to national product but it does help indirectly in economic development of a country. That way it is an essential part of the development process.
Main difference between development and non-development expenditures is that the development expenditure directly adds to the flow of goods and services whereas non-development expenditure does not. Again all the different types of expenditure, viz., plan or non-plan expenditure, revenue or capital expenditure can also be categorised into developmental expenditure and non-developmental expenditure.