Outcome Budget and it's Relevance in India

Introduction

A government budget is a government document presenting the government’s proposed revenues and spending for a financial year that is often passed by the legislature, approved by the chief executive or President and presented by the finance minister of the nation. The budget is also known as the Annual Financial Statement of the country. This document estimates the anticipated government revenues and government expenditures for the ensuing financial year. Outcome budget is one of the most popular techniques of budgeting which measures the development outcomes of all government programmes. 

What is Outcome Budget?

An outcome budget measures the development outcomes of all government programmes. It tells a citizen if money has been allocated for a developmental project, has indeed come up. In other words it is a means to develop a linkage between the money spent by a government and the results which follow. The Outcome Budget is a progress card on what various ministries and departments have done with the outlay announced in the annual budget. It will also tell us if the money has been spent for the purpose it was sanctioned and the outcome of the fund-usage. In poverty reduction is the objective and the programme of the government, overall well-being or living standards of the poor is treated as a higher level impact with outcome defined as poor’s access to and use of goods and services.

Outcomes are indicators showing the progress in achieving programme objectives, such as infrastructure improvement, decline in diseases, improvement in agricultural production, and achievements in education. These are not directly under the control of the programme managers due to the effect of many other extraneous factors.

The Outcome Budget is expected to sharpen the budgetary projections by listing the projected outcomes under various schemes programmes. The outcomes are expected results not only in terms of monetary units or physical infrastructure but also in terms of qualitative targets and achievements. Outcome budgeting is expected to lead to efficient service delivery, transparency, and accountability.

 For example, financial allocations under primary education are outlays, construction of an “n” number of primary school buildings could be the desired output, and the outcome could be to educate an “x” number of children up to the primary level. 

 Relevance of Outcome Budgeting in India

Since 1968, Government departments had been preparing performance budgets trying to link financial aspects to physical results. However, this remained a supplementary device without any perceptible impact on resource allocation. Acknowledging its drawbacks, the Government introduced a revised version called ‘Outcome Budget’ in 2005.

The performance-oriented budgets provide information on the use of public resources, as against the conventional Budget indicates the resources allocated to various programmes and schemes of the Government, but does not focus so much on the use of those resources to achieve certain agreed results. Taking along people of different socio-economic strata as part of an inclusive growth process requires effective use of resources. This objective is easy to fulfill by following outcome budgeting.

Performance budgeting is not new in India. The outcome budget in India provides an opportunity, which needs to be strengthened and taken forward. The important factors in this context are the ability to prepare measures under different Government programmes to evaluate results, and utilize this performance information in shaping the Budget decisions, both in programme formulation and resource allocation.

It is expected to change the mindsets of government officials to become more result oriented, instead of outlay centric. The Outcome Budget will discipline various ministries in their spending by ensuring that they do not stagger it towards the last quarter of the fiscal.

The Outcome Budget is also aimed at changing the outlook of the government officials. The idea is to make government representatives more result-oriented and keep them from delaying projects and asking for more expenditure to meet the spiraling costs. The focus will shift from 'outlays' to 'outcome.'

The outcome budgeting will help the government make its budgets more cost effective, double up as a major device to fix accountability and the government will manage its schemes better.

Outcome budgeting in India will help to release information on spending by various ministries for public scrutiny. This will ensure that everyone: people's representatives, the press, and those for whom the scheme is being implemented can check for themselves how well a project has been implemented.

The Outcome Budget will also help gauge the effectiveness of the money spent on various heads by different ministries. It will also help ensure that programmes and schemes do not continue indefinitely from one Plan period to the next, without an independent, in-depth evaluation.

India is the third largest economy (PPP) and also it is the largest democracy. The budget announced here is obviously of vast scale with large number of schemes and developmental programmes. Implementation of all the programmes within the targeted period is not an easy thing. Outcome budgeting will make the system more systematic leading to better implementation of the budgetary programmes.

Corruption in India has become an open secret. Every year huge amount of money is granted to spend in various developmental programmes but their true implementation and outcome is not known. Outcome budget will distinctly show the projected outcome and the true use of money can be hoped under the system.

Conclusion

The Outcome Budget is expected to ensure efficient service delivery, transparency and accountability which are the urgent needs of India. Some may argue that preparing an outcome budget is a lengthy process and experts are necessary for this purpose; but this argument is nullified by the merits of outcome budget. In summation, outcome budget is very much relevant in India.