Union Budget 2021 | What is Outcome Budget?

Finance Minister Nirmala Sitharaman is set to present a crucial Budget on February 1, 2021. The Budget will outline the economy's road to recovery in the post-Covid-19 world.

With the upcoming Budget just around the corner, let us understand some of the terms related to the annual exercise.

What is the Outcome Budget?

Outcome Budget looks at the performance of various ministries, how they have handled programs, schemes, expenses that ministries incurred to execute the functions of the ministry. It also looks at how ministries and departments spent the money assigned to them in the previous annual budget.

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It is considered to be a measurement tool that helps the government in implementing the budget schemes more effectively, keeping expenditure in check. Based on recommendations of the Administrative Reforms Commission in 1969, a system of performance budgeting was introduced. As there was a growing need to keep a track of the outcomes of programs and schemes, the then finance minister, P Chidambaram introduced the Outcome Budget in 2005-06.

Every ministry presents a preliminary outcome budget to the Ministry of Finance, which then compiles it into what we know as the Outcome Budget.

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Outlays are financial resources that are put into programs of a ministry. Outputs measure physical quantity of goods and services that are a result of government initiatives. Outcomes are the end results of government programs and schemes. In an Outcome Budget, outlays and outputs are taken stock of, quality and effectiveness of goods and service delivery are measured to determine the outcome of an initiative.

Assessment agencies often help ministries in evaluating the Outcome of schemes and programs.