Union Budget 2025 | FAQs: What is outcome budget?

The Union Budget for the upcoming financial year is all set to be presented on February 1, 2025, by Finance Minister Nirmala Sitharaman.

In light of the upcoming Budget, we take a look at some of the terms associated with the exercise

What is an Outcome Budget?

The concept of an Outcome Budget represents a significant evolution in the country's budgeting process. It is a framework that links the outlay of funds by various government ministries and departments to their expected outcomes.

This approach was introduced to enhance transparency, accountability, and effectiveness in the utilization of public funds.

The Outcome Budget serves as a performance measurement tool, providing a more detailed understanding of the objectives, intended outcomes, and actual impact of government spending.

Key aspects of Outcome Budget in India:

Linking Expenditure to Outcomes: The main objective of the Outcome Budget is to create a direct connection between the financial investments made by the government in various programs and schemes, and the results expected from those expenditures.

Performance Evaluation: Each ministry and department is required to provide detailed information about the performance indicators and targets for each program and scheme. This includes both physical and financial targets, and the time frame within which these targets are to be achieved.

Enhanced Accountability: By focusing on outcomes rather than just financial outlays, the Outcome Budget holds government entities more accountable for delivering results. This approach encourages more efficient and effective use of public funds.

Transparency: The Outcome Budget is a tool for promoting transparency in governance. It allows the public, policymakers, and other stakeholders to understand not just how much money is being spent, but what it is achieving, thus facilitating informed public discourse and policy analysis.

Regular Reporting and Assessment: Ministries and departments are required to regularly report on their progress towards achieving the stated outcomes. This periodic review helps in identifying areas where performance is lagging and where mid-course corrections might be necessary.

Policy Decision-Making: By providing a clear picture of the effectiveness of various programs and schemes, the Outcome Budget aids policymakers in making informed decisions regarding resource allocation, policy modifications, and future planning.

The introduction of Outcome Budgeting in India marked a shift from traditional input-based budgeting to a more result-oriented approach. It is an essential component of public financial management reforms in the country, aimed at ensuring that government spending translates into tangible and beneficial outcomes for the public.