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An outcome budget aims to look at the performance of various ministries handling development programmes. It also looks at the expenses incurred by them.
A system of performance budgeting by ministries was introduced in 1969 following the recommendations of the Administrative Reforms Commission. For long, a need was felt to address certain weaknesses in the performance budgeting system, such as lack of a clear relationship between the financial and performance budgets and inadequate target setting for the ensuing year.
Besides, there is a growing concern to track the ‘outcomes’. It was first introduced in 2005-06 by the then finance minister, P Chidambaram.
The outcome budget is a progress card on what various departments have done with the amount assigned in the previous annual Budget. It measures the outcomes of all government programmes and whether the money has been spent for the purpose it was sanctioned. From the 2006-07 financial year, every ministry handling a sector presents a preliminary outcome budget to the Ministry of Finance, which is responsible for compiling them.
The process of conversion of outlays into outcomes is a long one, with several intermediate stages and complementary resources required in achieving the intended impact. Outlays are financial resources deployed for achieving certain outcomes. Part of the money may come directly from the Budget and part from other stakeholders such as state governments or public-sector undertakings.
Outputs are a measure of the physical quantity of the goods or services produced through a government scheme or programme. They are usually an intermediate stage between ‘outlays’ and ‘outcomes’. For example, construction of a health care centre is the ‘output’, while increase in the literacy rate is the ‘final outcome’ or ‘impact’.
Outcomes or impact are the end results of various government initiatives. Going beyond mere ‘outputs’, they cover the quality and effectiveness of the goods or services.
The ministries would engage evaluators and assessment agencies for evaluation of the achievements against physical outputs and final outcomes of major flagship schemes.

Read full Outcome Budget documents

Outcome Budget 2021-2022