Which part of the budget is spent on routine items on a yearly basis?

The correct answer is Option 1 - Non-Plan

As in the USSR, the Planning Commission of India opted for five-year plans (FYP). The idea is very simple: the Government of India prepares a document that has a plan for all its income and expenditure for the next five years. Accordingly, the budget of the central and all the State governments is divided into two parts: the ‘non-plan’ budget which is spent on routine items on a yearly basis and the ‘plan’ budget which is spent on a five-year basis as per the priorities fixed by the plan. A five-year plan has the advantage of permitting the government to focus on the larger picture and make a long-term interventions in the economy.