OUTCOME BUDGET
It is
practiced by most of the Ministries while preparing their budget details
and submitting it to the Ministry of Finance for the preparation of the
annual budget towards the end of February. Outcome based
budgeting is a practice of suggesting and listing of estimated outcomes of
each programmes or schemes designed.
One
of the leading budgeting technique followed in India at present is the outcome
budgeting or outcome based budgeting. It is practiced by most of the Ministries
while preparing their budget details and submitting it to the Ministry of
Finance for the preparation of the annual budget towards the end of February. Outcome
based budgeting is a practice of suggesting and listing of estimated
outcomes of each programmes or schemes designed.
Outcomes
are the end products and results of various Government initiatives and
interventions, including those involving partnership with the State
Governments, Public Sector Undertakings, autonomous bodies and the community.
An interesting feature of outcome based budgeting is that the outcomes of
programmes are measured not just in terms of Rupees but also in terms of
physical units like Kilowatt of energy produced or tonnes of steel produced.
Also outcomes are expressed in terms of qualitative targets and achievements to
make the technique more comprehensive.
Procedure
of outcome based budgeting
Under
outcome budgeting, each Ministry presents a preliminary Outcome Budget to the
Finance Ministry, which is responsible for compiling them. The Outcome Budget
becomes a progress card on what various Ministries and Departments have done
with the outlays in the previous annual budget. It measures the development
outcomes of all government programmes and whether the money has been spent for
the purpose it was sanctioned including the outcome of the fund usage. Outcome
budget is a performance measurement tool that helps in:
·
Better service delivery
·
Decision-making
·
Evaluating programme performance and
results
·
Communicating programme goals
·
Improving programme effectiveness
·
Make budgets cost effective
·
Fix accountability
·
Aid better scheme management
Outcome
budgeting makes government programmes more result oriented, instead of outlay
oriented. Under outcome budgeting, the document shows physical dimensions of
the financial budget indicating the actual physical performance in the previous
year, current year and targeted performance during the projected (next) year.
From
2007-08 onwards, the previous Performance Budget was merged with Outcome
Budget. There was only one document i.e. the Outcome Budget. All Ministries
have to prepare outcome budgets to make the budgeting target oriented.
In Railways
1 The
performance budgeting came into effect in Railways in 1979-80 and has been
gradually stabilizing for purposes of management control over the costs in
relation to the physical activity. Before discussing the merits and advantages
of P.B, it is necessary to have an understanding the form of budget which was
in existence prior to the introduction of Performance Budgeting.
in one of the
reports the World Bank Study team has described Budget as prepared in the Past
as a "routine and dogged exercise, undertaken and produced by the
bureaucratic elite" The form in which the Railway Budget was presented to
Parliament till 1979-80 provided for appropriation of funds for certain items
of expenditure falling under each demand without correlating expenditure to the
quantum of service to be rendered with the aid of the funds sanctioned. For all
practical purposes the Budget was a portrayal or record of cash transactions and
their anticipations; it did not at all serve as a tool for management or as a device
for evaluation performance-
The
Conventional Budget was more ‘appropriation oriented’ than 'performance
oriented’. There were in all 22 demands for grants not strictly representing homogeneous functional groups or activities though the demands for grants’ are
supposed to basically represent the estimated expenditure in a 'Single' or
‘homogeneous’ group of functions. The other defects in the old system of budgeting were;-
i) The Accounts heads under the detailed heads
of accounts did not correlate with the Budget heads. The expenditure under
demands had to be collected from different revenue abstracts.
ii) Budget had little relevance to performance.
iii) When Parliament sanctioned the budget, it
was not aware of the quantum of services that would be rendered in The various
aspects of Railway activities,
2 Based on
the recommendations of a Task Force appointed for the purpose the demands for
grants have been restructured with the approval of the Estimates Committee. It
was therefore considered necessary that the budget as a document must be
capable of fulfilling the following objectives:-
i) to present more clearly the purpose and
objectives for which funds are sought and to bring out the programmes and
accomplishments in financial and physical terms.
ii) to help in the better understanding and
review of the budget
iii) to improve the formulation of the budget and
to aid the process of decision making at all levels of Govt., and
iv) to incorporate an element of
accountability,
3 Performance budgeting therefore, implies fixing in advance performance, targets, under
each activity, in acceptable and feasible measures of output, fixing
corresponding finance outlay for achieving these physical outputs and
monitoring and comparing the actual performance both in physical and financial
terms.
The steps
involved in Performance Budgeting, are identification of functions, programmes
and activities. In order to achieve the objectives of P.B, the demands for
grants have been restructured to spell out the functions, activities and
objects. Each demand has 3 subdivisions -
i) Sub Heads of Demands representing major
functions,
ii) Detailed Heads representing further
break-up of the activity classification i.e. identifying 'Why' the expenditure
is incurred,
iii) Primary Units identifying 'what' the
expenditure denotes (objects of expenditure, i.e salary, allowances, material
etc)
An example of
concordance between the Sub-Heads of Demands for Grants and Main Heads of
Accounting Classification is given below :-
15.4 For
purpose of Managerial Control over the costs in relation to the physical
activity, norms of quantity inputs and outputs and standards will have to
be fixed and monitored on the basis of Unit Costs. At present Unit Costs can be
assessed for few demands viz. Demand No.5, 6 and It). The units of performance
have however been prescribed for all Revenue Demands. Few Examples are given
below:-
|
Demand
|
Nature of demand
|
Performance
units
|
|
Demand No 4
|
Repairs and
Maintenance of Permanent Way and
Works- The staff and non - staff expenditure of the technical side pertaining
to civil Engineering Dept. including Bridge, water supply, maintenance of
buildings etc.
|
P Way – Equated Track KM
Service – 10 Sq Mts of plinth area
Water supply – million liters
for 10 m 2
Bridges – linear meters
|
|
Demand No 5
|
Repairs and
Maintenance of Motive Power The staff and non - staff expenditure of the
technical side pertaining to Mechanical Engineering Dept. including
maintenance of steam, diesel locomotives
both in open line and in workshops etc.
|
Steam locos- Engine holding/outage
Runnig repairs
POH, IOH and Spl Reparis
Diesel locos
Electric Locos
|
|
Demand No 6
|
Repairs and
Maintenance of Motive Power The staff and non - staff expenditure of the
technical side pertaining to Mechanical Engineering Dept. including
maintenance of coaches, wagons both in open line and in workshops etc.
|
Carriages:
Running repairs- out turn in
sick line in terms of vehicle units and No of trains dealt with in
yards/stations
POH and Spl Repairs – repair
units
|
|
Demand No 7
|
Repairs and
Maintenance of Plant and Equipment.
The staff and non - staff expenditure
of the technical side pertaining to
Civil, Mechanical, Electrical, Signal & Telecommunication Engineering both in open line and in workshops etc.
|
Civil Engg Dept, Mech and
Electrical – No of machines
Over head equipment – Ele
Engines / EMU Kms
Signalling equipment- No of
trains
|
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