For making Public Finance Management effective, India needs to reengineer its present system and make a transition towards outcome-based budgeting. Analyze.

The outcome-based budgeting system focuses on the qualitative outcomes of the budgetary expenditures.

Need for present system to be re-engineered:

• Bottom up approach leading to high transaction costs.
• Outlays based budgeting lacks proper outcomes in terms of substantial gains on ground.
• Focus on spending rather than increasing its efficacy.
• Short-term and unviable approaches leading to wasteful expenditure.
• Redundant allocation leading to wastage of resources.

Outcome budgeting as solution for public finance management:

• Increases scope of gains on ground.
• Social audits leading to positive feedback loop.
• Focus on quality leads to efficiency in expenditure.
• Increase in monitoring reduces wastage.
• Corruption and misappropriation of resources easy to identify.

Outcome budgeting is need of hour for India to develop an efficient public finance management system and increase the efficacy of budgetary allocation.

Topics: GS-III: Indian Economy Issues Relating to Planning • GS-III: Economic Growth Development • GS-III: Government Budgeting