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Govt may cut down social schemes to improve quality

The government may cut back some of the plethora of socio-economic schemes that have outlived their utility as it uses outcome budgeting to assess the impact of central sector schemes, a top official said. In a bid to improve quality of public expenditure, the finance ministry has asked every ministry to prepare outcome budget statement linking outlays against each scheme with deliverables achieved and their impact on economy and citizens.

business Updated: Feb 14, 2017 01:30 IST
PTI
In the process of overhauling the budget exercise to make every penny spent count, finance ministry is likely to substantially decrease the numbers of social schemes.
In the process of overhauling the budget exercise to make every penny spent count, finance ministry is likely to substantially decrease the numbers of social schemes.(PTI)

The government may cut back some of the plethora of socio-economic schemes that have outlived their utility as it uses outcome budgeting to assess the impact of central sector schemes, a top official said.

In a bid to improve quality of public expenditure, the finance ministry has asked every ministry to prepare outcome budget statement linking outlays against each scheme with deliverables achieved and their impact on economy and citizens.

The move is part of the budget overhauling exercise to make every penny spent count.

“Outcome budgeting essentially means that the investments which are made in any particular scheme or project must have a well-defined outcome. We had requested the ministries and they have given us an outcome budget which has been finalised after consultation with Niti Aayog and that outcome is what will measure the impact of that scheme,” Finance Secretary Ashok Lavasa told PTI here.

While the impact of some schemes may come in one year, in others, it may take a bit longer for the impact to be seen. “But the important aspect is all schemes must have an outcome. It should be measured, it can be monitored,” he said.

Niti Aayog will monitor the outcome.

Asked if this would lead to pruning of schemes, he said: “Certainly. It will mean that the schemes are assessed based on their efficiency. And already, we in 2017-18 dropped a number of schemes (central sector) which the ministries thought have outlived their utility.”

Finance Minister Arun Jaitley, he said, had last year announced that all schemes should have a sunset clause. “So, the intention of the government is that every ministry should be conscious that any scheme or project which is implemented will have a life,” he said further.

“During that period, they should be able to define what they want to achieve on completion of the scheme and if the ministry thinks that it is now complete, then it (scheme) should be dropped and we move on to the next scheme, unless they have good reasons to say that these schemes need to continue.”

Outcome-based budgeting is part of the overhaul of budget making exercise that also saw the classification of government spending in plan and non-plan categories making way for a division on the basis of revenue and capital expenditure.

Revenue expenditure refers to routine expenses such as those on salaries and pensions while capital expenditure refers to spending on long-term investments such as infrastructure.

The outcome-based one will outline what can be achieved with what is being spent and will involve the process of defining the desired long-term outcome of schemes of various ministries.