The Hindu Business Line : Outcome Budget: Exercise in futility?

THE BUDGET exercise consists of putting together the Budget Estimates of the preceding year, the Revised Estimates for the preceding year and the Budget Estimates for the year ahead. Expenditure, expenditure, expenditure! And then the Finance Minister proceeds to find funds to meet the list of estimated expenditure, as compiled by the various ministries and vetted by the Prime Minister.

Of course, then come the estimates of revenues and proposals for raising them.These piles of monetary figures have a real content. Somewhere in each ministry, or at the State or district level, lie specific projects and plans for work.

It is on the basis of these physical plans that a ministry compiles its Budget Estimates, which get included in the General Budget.

In his Budget speech this year, the Finance Minister, Mr P. Chidambaram, said: "I must caution that outlays do not necessarily mean outcomes; the people of the country are concerned with the outcomes." That looked an impressive pronouncement and the people at large had the impression that something startlingly new was being attempted.

The Finance Minister promised to put in place, together with the Planning Commission, a mechanism to measure the development outcome of all major programmes. Subsequently, the Prime minister wrote to the ministries stressing the importance of converting financial outlays into physical outcomes, with fixed quarterly measurable and monitorable targets to improve the quality of implementation of development programmes.

The ministries have attempted this exercise and worked out the targets of intermediate outputs/outcomes in respect of the planning programmes/schemes being implemented by them.

The Finance Minister presented the results of the exercise in the form of a voluminous document to both the Houses of Parliament. From next year, this Outcome Budget will be a part and parcel of the regular financial budget. The Finance Minister emphasised that the exercise had been complex and involved:

Standardising unit cost of delivery;

Benchmarking the standards/quality of outcome and services;

Capacity-building for requisite efficiency at all levels in terms of equipment, technology, knowledge and skills;

Ensuring flow of right amount of money at the right time to the right level with neither delay nor parking of funds;

Effective monitoring and evaluation systems; and

Involvement of the community/target-groups/recipients of the service, with easy access and feedback systems.

Quite impressive and high-sounding. However, if one goes through the compilation put together by the Finance Ministry, one wonders what the whole hullabaloo is about?

There are, no doubt, some positive bits of information:

Subsidy outlay on LPG and kerosene of Rs 3,600 crore;

Expenditure to enhance refining capacity at State-owned oil companies of Rs 6,163 crore;

Money to be spent on revival of sick Public Sector Units put at Rs. 400 crore;

The government will slowly reduce support to restructuring sick units;

The National Highway Development Programme outlay at Rs 8,800 crore;

Golden Quadrilateral Project to be completed by December 2006;

North-South East-West Highway Corridors to be completed by 2007;

Outlay for repayment of aircraft loan put at Rs 308 crore; and

Expenditure for the setting up of Rural Parks at Rs 200 crore.

There is more information of this type. As for agriculture, the whole exercise appears to have been wasted. The Budget had promised an Integrated Scheme of oilseeds, pulses, oil palm and maize at Rs 200.40 crore. The outcome? The State governments at times do not fully use their allocated funds for lack of matching grants!

Yet another scheme was integrated development of tree-borne oilseeds. The outcome? Non-availability of the right planting material, unfavourable weather conditions and non-availability of cultivable wasteland.

In respect of the National Agricultural Insurance Scheme, the Outcome Budget mentions figures of kharif 2004. Even the figures of rabi 2004-05 are not available in the exercise of the 2005-06 Outcome Budget.

On the all-important, Farm Water Management project for increasing crop production in eastern India, the Outcome is: the Department of Agriculture and Cooperation has recommended transference of this scheme to the State governments!

As for the Technology Mission on Cotton, the deliverance will be realised by the end of the year because of the inability of the State governments to contribute their matching share in time!

There is little point in continuing this roll-call. It is quite clear that the ministries referred to the files of physical projects they had to begin with and submitted some sort of a progress report.

In the pre-Budget period, the physical projects were converted into financial terms and, in the Outcome Budget they are being re-converted to physical terms, keeping in mind the actual release of the funds.

The people do want to know the outcome in physical terms. But they never wish to have physical planning of the type that the erstwhile USSR used.

One wonders whether, in the last days of planning, when the state limits its role to engendering a conducive environment for the economy, if this exercise in pseudo-physical planning makes any particular sense.

This year's Outcome Budget exercise was limited only to the Plan expenditure, where possibly it had some utility.

The Finance Minister promises to extend this exercise to even non-Plan expenditure from next year onwards. At a time when the need of the hour is to substantially slash governmental expenditure, one wonders if the exercise of the Outcome Budget is worthwhile.

(The author is Founder, Shetkari Sanghatana, and can be contacted at sharad.mah@nic.in)

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