Question

Which of the statements is /are correct regarding Outcome-based budgeting. 

1. It was started in the year 2004-05 in India.
2. Maharashtra was the 1st state to implement outcome-based budgeting in India.
3. The Outcome Budget becomes a progress card on what various Ministries and Departments have done with the outlays in the previous annual budget.
4. Peter Phyrr is said to be father of outcome based budgeting.

Answer 1

Correct Answer - Option 3 : The Outcome Budget becomes a progress card on what various Ministries and Departments have done with the outlays in the previous annual budget.

The correct answer is The Outcome Budget becomes a progress card on what various Ministries and Departments have done with the outlays in the previous annual budget.

• Outcome-based budgeting is a practice of suggesting and listing of estimated outcomes of each program or schemes designed.
• Outcome-based budgeting was first introduced in India in the year 2005-06. Hence the first option is not correct.
• It was introduced by the Union government, led by the UPA under then PM  Sh. Manmohan Singh. Hence the second option is not correct.
• Peter Phyrr is said to be the father of Zero-based budgeting, who developed the idea of zero-based budgeting (ZBB) in the 1970s. Hence the fourth option is not correct.
• From 2007-08 onwards, the previous Performance Budget was merged with the 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.

• Outcomes are the end products and results of various Government initiatives and interventions.
• An interesting feature of outcome-based budgeting is that the outcomes of programs 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.
• Outcome budget is a performance measurement tool that helps in : 
  • Better service delivery
  • Decision-making 
  • Evaluating program performance and results 
  • Communicating program goals
  • Improving program effectiveness
  • Make budgets cost-effective 
  • Fix accountability 
  • Aid better scheme management