Outcome budgeting

Subject :Economy

Section: Fiscal Policy

What is outcome budgeting ?

Over the year’s performance budget was seen as following output, rather than outcomes (Budget speech of 2005-06 highlighted this).
Outcome budgeting lays emphasis on linkages between money allocated (outlay) and the outcomes (and not just outputs).
It shifts the focus to the short and long-term outcomes of governance
The outcomes are not just in Rupee terms, but in actual unit achieved (Ex- Actual KMS of road laid) and qualitative target it helped achieved.
Outcome Budget was first introduced in India in 2005-06.
From the 2006-07 financial year, every ministry handling a sector presents a preliminary outcome budget to the Ministry of Finance, which is responsible for compiling them

Understanding outlay, output and outcome

Outlays are financial resources deployed for achieving certain outcomes.
Outputs are a measure of the physical quantity of the goods or services produced through a government scheme or programme. They are usually an intermediate stage between ‘outlays’ and ‘outcomes. For example, construction of a health care centre is the ‘output’, while increase in the literacy rate is the ‘final outcome’ or ‘impact’.
Outcomes or impact are the end results of various government initiatives. Going beyond mere ‘outputs’, they cover the quality and effectiveness of the goods or services.