The Hindu Business Line : `Outcome Budget' in July

THE Government would bring out an "Outcome Budget" early next month to gauge the effectiveness of the money spent on various heads under different ministries, the Finance Minister, Mr P. Chidambaram, said here on Tuesday.

"In the first week of July, we will come out with an outcome budget," the Finance Minister told presspersons after his presentation at the National Development Council.

The Minister said that the `Outcome Budget' would specify the desired outcomes in quantitative terms with a timeframe. The key to achieving outcomes, he said, was to ensure efficient service delivery, transparency and accountability.

The Outcome Budget would also help in allocating resources based on progress in delivery, Mr Chidambaram said, and urged the State governments to carry out similar exercises for better tracking of their expenditures.

The Finance Minister also expressed satisfaction on the state of the economy in terms of low inflation and interest rates. "The economy is in a resilient mode and inflation is under control. To achieve 7.5 per cent growth investment has to be increased from 26.3 per cent of GDP to 31.13 per cent by 2008-09," he said.

The Minister said that the Government should continue with fiscal consolidation to maintain benign inflation and interest rate scenario to promote private investments. He said that the Central Sales Tax, CST, phase out will soon be recommended by the Empowered Committee.

Stating that the planned investments fell short of the mid-term appraisal targets by 50 per cent in the first three years of the Tenth Plan, the Minister said that, "We have to make up the balance 50 per cent in the remaining two years, that is 2005-06 and 2006-07, which is a tall order.''

Touching upon the borrowing by State governments, the Minister said that, "As per assessment of Finance Ministry and Reserve Bank, States will borrow less this year than indicated."

States were slated to mop up Rs 23,000 crore this fiscal but would end up borrowing less because of increase in grants and allocation from the central pool of taxes, as recommended by the Twelfth Finance Commission, he said.

During his presentation at the NDC, the Finance Minister asked the Chief Ministers to carry forward pension reforms as the liabilities of both Centre and States was expected to cross a staggering Rs 100,000 crore by 2009-10.

He said that nine States — Himachal Pradesh, Tamil Nadu, Rajasthan, Andhra Pradesh, Chhattisgarh, Jharkhand, Manipur, Gujarat and Madhya Pradesh — have already implemented the new pension scheme (NPS). Other States such as Assam, Orissa, Kerala and Punjab are also considering introduction of the new pension system, he said.

The new pension scheme is a defined contribution scheme where the employee saves for his pension.

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