An Introduction to

“Outcome Budget”
a
Presentation by
V.R.Ramankutty,
ACA(Rtd.), Ingaf.,
Mumbai
1
 Beginning
1. Outcome Budget introduced in India in 2005-2006
2. The first Outcome Budget was presented to
Parliament on 25-08-2005
3. Full-fledged Outcome Budget started from 2006-
2007
4. It is introduced to address certain weakness in
Performance Budget

(Authority: OM No.2(1)Pers/E.Coord/OB/2005 dated 30-12-2005 of Ministry of

Finance – Instructions for preparation of Outcome Budget

2
 Objective

1. It is a progress card of various

Ministries/Departments to show what they
have done with “outlay”
2. It is mainly targeted the Plan Schemes &
Projects. However, Non-Plan expenditure
ancillary to Plan Schemes & Projects may
also be included.

3
 Objective
1. It is a Performance Measurement Tool to ascertain:
a. Better service delivery
b. To measure developmental outcomes of all
Government Programmes & Schemes
c. Decision making
d. Evaluation programme Performance & Results
e. Communicating Programme goals
f. Improving programme effectiveness
g. Ensure efficient service delivery
h. Transparency
i. Accountability

4
 Scope
1. Each Ministry/Dept. will prepare Outcome
Budget in respect of all demands /appropriations
2. Certain Ministries are exempted
3. Gauge the effectiveness of the money spent on
various schemes
4. Ensure that Programmes and Schemes do not
continue indefinitely from one plan period to
next without an independent in-depth evaluation
5. Prepared Plan & Non-plan separately

5
 OUTLAYS vs OUTCOMES
1. “Outcomes” are the ultimate aim of
Government Policy & Budgetary Support
2. Outcome Budget is introduced to track not
just intermediate physical “outputs” but
“Outcomes”(measurable & quantifiable
physical targets)
3. “Outcome” is more important than “outputs”
4. End objective of any expenditure (Outlays) is
the effective “Outcome” than mere
“Outputs”
6
 Converting ‘Outlays’ into ‘Outcomes’

1. It is a complex process addressing “value for

money”
2. It is management process rather than
financial process
3. Different approaches by difference ministries
4. It requires detailed scrutiny of expenditure
on yearly basis, with an value addition based
on the preceding year’s experience

7
 Converting ‘Outlays’ into ‘Outcomes’
5. Define intermediate and final ‘outcomes’
specifically in measurable and monitorable terms
6. Standardizing unit cost of delivery
7. Benchmarking the standards/quality of outcomes
and services
8. Capacity building for requisite efficiency at all
levels in terms of:
a) Equipment
b) Technology
c) Knowledge
d) Skills 8
 Converting ‘Outlays’ into ‘Outcomes’

9. Ensuring adequate flow of funds at the

appropriate time to the appropriate levels
avoiding both “delay” & “Parking Funds”
10.Setting up effective Monitoring & Evaluation
systems, to indicate directions for further
calibration and honing the process, to deliver
intended ‘outcomes’
11.Involving the community/target groups/
recipients of the service, with easy access and
feedback systems
9
 Format of Outcome Budget
The outcome budget should be prepared in the form of a
document by each Ministry/Department broadly
consisting the following 3 chapters with details of :
Chapter: I
1. Mandate,
2. Goals,
3. Objectives,
4. Policy frame work
5. Vision Statement

10
 Format of Outcome Budget
Chapter: II
1. This will contain tabular format
2. Separate tables for each Demands of Grants/each PSU & AB
3. Create “one-to-one” relationship between Financial Budget & Outcome
Budget with details:
a) Financial Outlays
b) Projected physical outputs
c) Projected/budgeted outcomes (intermediate/partial and final)
d) ‘Final Outcome’ component of Outcome Budget need not necessarily
have yearly targets. It can be measured in line with Five Year Plans. Partial
Outcome should be, in this case, mentioned.
e) Where “final outcome” are not measurable & quantifiable, the likely
benefits accrue may be incorporated.
f) Explanatory Notes wherever necessary
11
 Format of Outcome Budget
Chapter III
This Chapter will detail:
1. Reform Measures & Policy Initiatives
2. How the above relative to the intermediate outputs and
final outcomes in areas such as:
a) Public-Private Partnerships
b) Alternative delivery mechanisms
c) Social & gender empowerment process
d) Greater de-centralization
e) Transparency
f) Accountability
12
 Future Refinements
1. Systematic data collection on past trends & present development in
Markets and Technology with the help of specialized agencies where
necessary
2. Develop measurable “indexes of performance” to measure quality of
implementation
3. Develop norms of standard unit cost of delivery of a service
4. Quantification/factoring in an environmental outcomes
5. Quantification of community and empowerment outcomes through social
capital formation
6. Quantification o f impact of funds earmarked for publicity/awareness
generation
7. Resolve Coasting Issues with Cost Accounts Branch
8. Independent evaluation by Ministries

13
 Nodal Officer
1. Ministry/Department is essentially
responsible for preparation of “Outcome
Budget”
2. Integrated Financial Advisor (IFA) will be
nodal officer for coordinating the whole
exercise and organization need-based
consultations with other Ministries
/Planning Commission/Outside Experts

14
 Monitoring
The following Offices will keep an eye to ensure
whether desired result is achieved:
1. Finance Ministry
2. Planning Commission

15
16