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Where the outcome is important

The attempt at preparing an outcome budget to monitor public expenditure is by itself laudable even though the first ever attempt might have fallen short of expectations. India joins a list of select countries, which have institutionalised a mechanism to measure the development outcomes of all government programmes. When properly structured, the outcome budget can become an important tool in the management of public finance, ensuring cost effectiveness of outlays while simultaneously ensuring that the money spent is accounted for. As it would indicate expenditure incurred on specific projects along with the physical progress achieved during the year, the document will serve as a reference point for the next year's budget. A pre-requisite to the exercise is transparency in government finances. Earlier this year, the Government decided to place in the public domain relevant information on spending by the Central Ministries so that those who have a stake as well as public-spirited citizens can scrutinise how the money is spent. The outcome budget takes the process further: in what is termed as a pre-expenditure process, it will set targets to be achieved along with timetables for each project or programme. That way financial outlays are expressed in terms of physical targets that can be more meaningfully monitored.

Inevitably the first attempt, even by the Government's admission, has not yielded "a perfect document." The Government needs to build the requisite skills, knowledge, and attitude to draw proper lessons from the exercise that calls for much more than juxtaposing sanctioned expenditure with the physical progress achieved. The expectation is that there will be an increased awareness among government servants of the need to concentrate on outcomes rather than on the outlays. Although as many as 44 ministries and 61 departments have participated this year it is only plan expenditure that is being monitored for now. The bigger challenge, as always, is to check non-plan expenditure. There have been certain practical difficulties such as in benchmarking the standards and quality of outcomes in certain areas such as infrastructure where the outlays are huge. Besides, it is not easy to evaluate, in one financial year, the effectiveness of programmes or projects that typically take many years to fructify. Programmes with a high social content need to be measured against specially developed benchmarks. The Government has promised to set up a special mechanism to monitor flagship programmes such as the Bharat Nirman and the new national rural employment guarantee scheme. The outcome budget is a welcome step in the direction of greater fiscal discipline. Obviously it needs to be further refined and enlarged if the results envisaged are to be achieved.

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