In August 2005, a new experiment was initiated by India’s Ministry of Finance under P. Chidambaram. Every Ministry would have to prepare an “Outcome Budget” and present it in parliament along with its annual budget. An Outcome Budget, as the foreword to “Outlays and Outcomes – towards achieving better results” explains is essentially the following:
It is a mechanism to measure the development outcomes of all major programmes.
Therefore, to improve the quality of government programmes, every ministry has to explain the amount allocated for a particular programme/ scheme/ project in terms of what kind of physical outcome would be achieved by spending some amount.
For example: if the Ministry for Human Resource and Development wants to spend 1000 crore on elementary education, it will have to explain what will be the exact increase in literacy, in infrastructure for schools, in improving the quality of teachers etc that spending this money will achieve.
At the end of the year, when next year’s budget is presented, the Ministry will then have to state what the achievement has been compared to the expected results. In the last 4-5 years, most ministries have started publishing Outcome Budgets. One ministry which does not, is that of Defence.
The Defence Ministry was exempted from this process by the Ministry of Finance. The Defence Ministry had stated its reasons before a committee of Parliament as: