Outcome Budget: Outlays fine, what about outcomes?

By T Nandakumar & Shweta Saini

Most reviews of a Budget cover the Budget Speech, policy announcements, headline numbers and a few major outlays. But do higher outlays mean better outcomes? “Citizens are interested in outcomes, not outlays” was the premise with which Outcome Budgets (OBs) were introduced.

An outcome budget, for the uninitiated, is one of the 14 documents presented along with the Budget and connects the expenditure budget (or budgetary outlays) of a scheme or programme with quantifiable outputs and measurable outcomes.

Outcome documents are designed to assign accountability and bring transparency into budget expenditures. It is akin to key result areas (KRAs) in corporate parlance. While the expenditure budget details the outlays (amounts to be provided for a programme or scheme), the output-outcome framework lists the physical targets and measurable outcomes to be achieved.

OB, therefore, becomes one of the most important budget documents to be critically reviewed by citizens. In addition to understanding the outcomes, an analysis of OB would provide an assessment of government’s real development agenda.

Outcome Budget FY23
Ideally, one should review all major schemes included in the OB. Outcome Budget 2022-23, the document, lists 157 major schemes (schemes with outlays of more than Rs 500 crore).Such a review is not possible in a short article. We restrict our review to the outcome budget for department of agriculture and farmers’ welfare, which lists 12 schemes as opposed to 25 last year. We look at a few schemes to understand the importance of OD and the implications of not reviewing at this document.

First, take a look at the Modified Interest Subvention Scheme (MISS) with an outlay of Rs 19,500 crore in FY23. In FY22, this scheme was listed as ‘interest subsidy for short term credit for farmers’ with an outlay of Rs 19,468 crore. This year, MISS output#1 is ‘number of new accounts of farmers granted short term credit’ with a target of 1.33 crore new accounts. The outcome against this outlay is ‘access to credit’ with two measurable targets: (i) Prompt Repayment Incentive (PRI) to 18.4 crore farmer accounts (7.98 crore last year) and total loan amount disbursal of Rs 9.8 crore (yes, it says crore and not lakh crore!) against Rs 5.4 lakh crore FY22. FY23’s agri-credit target is Rs 18 lakh crore. But such aspirational outcomes and targets are supported by only a net addition of Rs 32 crore under the scheme? Is something ‘MISSing’ here?

The case of stubble burning is more confusing. Unlike earlier years when the outlay for crop residue management was higher than `500 crore and therefore was detailed in the outcome budget, for FY23, the programme has been subsumed under the Rashtriya Krishi Vikas Yojana and the outlay appears to have been reduced. In fact, now it is for the states to provide this unless ministry of environment steps in with financial support. The outcome is “quantity of crop-residue managed through machinery under this scheme” and “quantity of land over which crop residue management adopted under this scheme”. Both the outputs and outcomes remain the same for FY22 and FY23.

Also, it appears that the cumulative (this is our understanding since it is not clear in the document) quantity of land over which crop residue management is being/will continue to be adopted under this scheme is 41 lakh hectare. Is the government claiming that crop residues in 41 lakh hectare of paddy land is being managed with the machines provided? If so, most of the paddy land around NCR is being taken care of and Delhi should breathe easy! So why the fuss about stubble burning? Or do we need a fact check?

The big announcement in the Budget is the shift to ‘chemical-free natural farming’. The outcome budget has no output or outcome listed for the next year. There is another important statement about 2023 being the “International Year of Millets” and support being provided for post-harvest value addition, branding, etc. No mention of this scheme either, probably because budget outlays are less than Rs 500 crore. So much for the big changes!

Even the big daddy of agriculture outlays, the PM-KISAN, with an outlay of Rs 68,000 crore, has listed output/outcome numbers not matching with outlays. So much for due diligence!

Overall, it appears that the OB document has lost its rigour and seriousness. If the roadmap and the key milestones are not synced and adequately defined, budget outlays will continue to be just that—expenditure targets.

Budget outlays talk about big numbers—the total outlay of Rs 39.45 lakh crore, for instance. But, for us, the tax-paying citizens, outcomes and, to some extent, outputs make sense. The government claims that via an outcome budget, it “nurture(s) an open, accountable, proactive and purposeful style of governance by transitioning from mere outlays to result-oriented outputs and outcomes.” The above brief analysis of the OB document is meant to highlight its weakening relevance.

When was the last time we heard the outcome budget being discussed in Parliament? Isn’t time that we, the tax-payers, discuss the outcome budget and demand more accountability from the government?

The authors are  Respectively, former secretary, GoI, and senior fellow (visiting), ICRIER